Greetings and welcome to the CenturyLink First Quarter 2019 Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded, Wednesday, May 08, 2019. I would now like to turn the conference over to Valerie Finberg, Vice President of Investor Relations. Please go ahead.

Thank you, Melody. Good afternoon, everyone, and thank you for joining us for the CenturyLink first quarter 2019 earnings call. With us on the call today are Jeff Storey, President and Chief Executive Officer; and Neel Dev, Executive Vice President and Chief Financial Officer. Before we get started, I need to call your attention to our Safe Harbor statement on slide 2 of our 1Q19 presentation, which notes that this conference call may include forward-looking statements, subject to risks and uncertainties. In addition, we will refer to certain non-GAAP financial measures, which are reconciled to the most comparable GAAP measures. Those reconciliations can be found on our Investor Relations website. Additionally, please note that certain metrics discussed on the call today exclude transformation costs and other special items as described in our earnings materials. With that, I'll turn the call over to Jeff.

Thanks, Valerie, and thank you everyone for joining us. CenturyLink closed the Level 3 acquisition about 18 months ago. Since then, we've been integrating and building a new CenturyLink by focusing on a few key objectives, improving our customer experience and delivering value to our customers, focusing our efforts on products and services that drive profitable revenue and are closely tied to our very best asset, the fiber network, expanding the fiber network to reach more customers and to grow our on-net footprint, not just to enable today's services, but because a rich and deep fiber network is essential for the services we know our customers will need tomorrow and investing in transforming our business, dramatically improving the way we operate and reducing our cost structure. Through these efforts, we delivered another good quarter of adjusted EBITDA growth and margin expansion to start the year. Our first quarter adjusted EBITDA margin was 40.1%, which represents a significant 460 basis point improvement since we closed the Level 3 acquisition. It's also the high mark since the fourth quarter of 2015, which was the last time CenturyLink reported adjusted EBITDA margin above 40% and we expect margins to continue to expand. As I said before, we believe we have the best fiber assets in the industry. And we are continually investing in expanding the network and our capabilities. This quarter was no exception. During the quarter, we connected nearly 4500 new fiber fed buildings to our network. We expanded our edge computing capacity and added significant incremental capacity to our existing Intercity network. Stop and think about that first step just for a minute. We added 4500 new fiber fed on-net buildings in a single quarter. We continue expanding the reach and capabilities of our network and have the ability to scale…

Thank you, Jeff and good afternoon, everyone. Let me begin with our financial summary on slide 5. We are pleased with our continued EBITDA margin expansion and year-over-year EBITDA growth, driven by our focus on profitable revenue and cost transformation initiatives. The financial guardrails and evaluation processes we have in place across the business units are working and we are adding profitable and durable revenue. We're off to a good start on our cost transformation initiatives, exiting the quarter with 128 million of annualized run rate adjusted EBITDA savings. Despite a top line decline of 5%, we grew EBITDA of 3.7% year-over-year. We expanded adjusted EBITDA margin to 40.1% this quarter, compared to 35.5% at the close of the Level 3 transaction. Based on our progress to date, we feel good about our financial performance and are reiterating our outlook for the full year 2019. Turning to revenue on slide 6, the total revenue in the first quarter declined 5% to 5.65 billion. Before I get into sequential revenue performance, as a reminder, fourth quarter is seasonally strong. And first quarter is when we typically see contract rerates [ph], primarily for our largest customers, mainly in wholesale and global accounts. Additionally, we had higher than usual non-recurring revenue of about 40 million in the fourth quarter 2018, benefiting enterprise and international and global accounts for iGAM. With that in mind, on a sequential basis, total revenue declined 2.3%. Our iGAM revenue decreased 4.7% year-over-year. Currency was a factor in year-over-year performance, as was the revenue impact from the large contract that was renegotiated in the second quarter 2018. The combination of those two items impacted revenue by about 30 million. Normalizing for those items, iGAM would have declined 1.5%. Sequentially, revenue decreased 3.5% compared to an increase of 3.5% last…

Thank you, Neel. Neel provided the details. But in general, we're seeing strong demand in our business groups. Our customers’ networking needs require them to transport more and more bandwidth, whether to public clouds or private data centers, and to connect their worldwide locations with varying requirements for bandwidth at each location. Our ability to meet their needs with our extensive product portfolio has been a differentiator. We can solve our customers’ connectivity challenges, big and small, local to global, managed to run managed. The array of solutions we provide gives us the ability to meet the particular challenges for each customer in each of their locations. After a slow start, our sales ramped steadily over the course of the first quarter. And in spite of things like the government shutdown and normal seasonality, sales were solid for the full quarter. I believe it's a direct result of our assets, our product capabilities and our focus on the enterprise market. Starting with the global accounts management group within our international and GAM segment, we did see somewhat of offsetting trends this quarter with growth opportunities for global connectivity, offset by rerates for several of the largest hyper scale customers. As we've worked through the underwater contracts, we intentionally terminated and have discussed previously we're optimistic about the improving trajectory at this business. Turning to enterprise, we've mentioned the effect of the government shutdown, but sales were strong within this segment. Not only have government sales ramped over the last couple of months, but we've also gained traction in the strategic enterprise portion of the channel. We expect revenue performance for iGAM and enterprise to improve as we look to the second half of the year. For small and medium business, we're making improvements in how we go to market. We…

[Operator Instructions] Our first question comes from the line of Philip Cusick of JPMorgan.

I can't help, but ask for more on the strategic options for consumer. Let me just think, would you consider separating the network and services businesses for consumer? Is that attractive at all? And then also, would you consider selling maybe just the fiber within that business and hanging on the copper or is that too hard as well?

It's early in the process, Phil and, I don't think that we have blocked out any alternative that makes sense, but it's really early in the process for us to go into too much detail about what that might look like. We are very open though, having maximized value for our shareholders by looking at the business with kind of clear eyes, clean eyes.

And then as long as we're on it, maybe in the consumer broadband business, how many of those sub 20 megabit per second broadband subs remain and what percent are competitive with cable? Thanks.

So, if you look at 20 megs and below, I think we are at about 55% right now and it was at 60 not too long ago. So in general, those are declining and 20 megs and above subs are growing. So I think, but again, if you sub segment that, there are areas where 20 megs is competitive, so that goes back to our micro targeting approach. We're being very focused on the assets that we think drives long term value. So if it's in a non-competitive market, we're not burning a lot of sales cycles for anything other than 20 meg.

But can you give us some kind of split between that 55% of what competes with cable and what portion doesn't? Even rough numbers?

If you look at, a big part of that competes with cables. So yeah, we're competing with cable on an everyday basis.

And then it also includes all our categories usually, will be lower speed in the 20 meg range.

Our next question is from the line of Simon Flannery of Morgan Stanley.

I wonder, Neel, if you could just talk a little bit about the free cash flow? I think you went into some of the working capital moves there. But how does it -- what's the shape of the free cash flow over the balance of the year? And how are you thinking about what you're doing with the balance sheet? So there was a drop in the long term debt in the quarter, but how do you think about reducing maturities over time and changing the structure of your balance sheet and any details on what the incremental CapEx, what the new projects are that is driving the increase year-over-year? Thanks.

Sure. So on free cash flow, Simon, I think it largely is working capital. So, we had an extra payroll cycle. Also the bonus payments to the entire company was a lot higher this year compared to last year, based on EBITDA performance, that's one of the drivers for how we calibrate our bonus. So just the payroll and the bonus alone is a $300 million swing between first quarter of last year and first quarter of this year. Plus, if you remember, in fourth quarter, we ramped up quite a bit of capital spending towards the end of the year, and that cash kind of went out in first quarter. So, it was primarily working capital for first quarter free cash flow performance. But overall, we feel pretty good about free cash flow for the full year. In terms of your question on interest expense and debt, keep in mind that when -- the interest expense guidance that we provided, we announced our new capital allocation plan at the same time, so that's kind of factored in there in terms of what we think the outlook is going to be, although rates have come down, so we get a little bit of benefit on the floating rate side. But so maybe a little bit towards the lower end of the range from an interest expense perspective, but will be opportunistic on that. So if you just look at, since the close of the Level 3 transaction to now, we went from 4.3 times to 3.9 times. If you just look at the underlying math there, LTM EBITDA growth of 400 plus million and reducing debt over 2 billion. So we feel good about the glide path and we'll continue to work on that. And in terms of incremental CapEx, the first point I'd make is we’ll be success based. And some of the areas that Jeff highlighted, we’ll continue to expand our network. We believe fiber is a long life asset, so we will continue to build network. We're investing in our product capabilities, and we're investing in our digital transformation.

Our next question comes from the line of Michael Rollins of Citi.

Just following up back on the question about the strategic exploration for the consumer business. So you chose to define the exploration as consumer. What's the possibility that that gets expanded to the term ALEC [ph], just given the complexities that the management team has previously talked about between the consumer business and the network? So just a follow on to the earlier question there? And then secondly, as you look at the new segments by service types, and you look at the updated disclosures, is there a way to think about, if you go a few years out, where you see trough revenue in the legacy revenue items, just to give us a sense of how big the headwinds could be in a multi-year period of time. And then we could conceptualize what's happening on the strategic side of the business, some of the products and the focus that you described you're making between new buildings, new fiber routes and customer wins. Thanks.

Sure. So let me let me take the strategic exploration question first. Again, it's early in the process. And so I don't want to to say this is the answer or that is the answer. Is it possible? And I'm going to interpret your question, Mike to say, the small business and the consumer business in some markets as ALEC [ph] businesses, it's possible for us to look at that as ALEC business and think about it as a collective. Sure it is, but it's early in the process. And I guess the desire for everybody to say, well, what are the potential answers, but I'm not ready to say that potential answers because we want to go through the process and we want to evaluate what's the best way to create value for our shareholders and be open to any of those without precluding any before you even start? Neel, you want to talk about segments?

Sure. So we provided a fair amount of additional disclosure on the product by segment. So if you think about the consumer segment, like we highlighted, the area that we're really investing is in broadband. So it's all about our micro targeting strategy there. And we'll focus on improving the revenue trajectory for broadband revenues. In addition to this top line, there are a lot of things we're doing in terms of the cost structure, in terms of how we turn up customers, self-installs, the entire customer experience sin that space. Plus keep in mind, broadband, I think enables over the top, so we've gotten out of Prism and over the top streaming, et cetera. So we're offering a pure broadband product. Voice will continue to decline and we’ll calibrate the cost structure to maximize profitability and not only the variable cost, but the fixed cost of taking switches out of the network, right sizing real estate, et cetera. So, that's the consumer side. If you think about the other segments, the true legacy there is voice. And -- but there's some offset like, within voice there is Voice over IP set and other things that are going, but legacy voice is very large. So that gives you an idea of the size of the legacy of revenue streams and our objective there will continue to be to maximize profitability. Now, there's private line and other services within transport, but customers move up and down those revenue streams and have been doing that for a year. So, we're focused on growing the overall customer relationship for those products.

Our next question comes from the line of Batya Levi of UBS.

You mentioned a rerating of some of the contracts this quarter. Can you talk a little bit about how that compares to some of the historical trends or maybe your expectations for the upcoming renewals? And what gives you the confidence that the volumes will outpace these type of pricing pressures going forward now.

So, for large customers, we’ve always had this dynamic. So, this is nothing out of the ordinary. Then the key point for us is, when we rerate some of those services, it's still in a good return on investment for us. So yeah, and we've seen that over the years, as we rerate it, especially if you think about IT services, CDN services, some of our other usage based services, we do have rerates. Now, it might take an additional quarter or two, but the volumes grab the revenue picture. And then additionally, our costs to provide those services continue to come down from a capital efficiency standpoint. So it's generally been a good decision for us in the past and the ones we had in the first quarter were in line with what we've seen historically.

And, what gives us confidence that volume will outpace it is, I talked about rerates from a couple of hyper scalars, which is exactly as Neel said, that's, that's just the nature of this business to grow to a certain scale. We give rerates associated with that scale as they get bigger and bigger. And the vast majority of our customers rerate to not that big of a driver to the vast majority of our customers and we see the demand for the products and services we sell. There is nothing letting us about fiber based services, about IP based services, about MPLS and SD WAN. And what we're actually seeing with respect to MPLS and SD WAN is what I've been saying for the past year, which is they go together, that our SD WAN customers are wanting to buy MPLS. And, some very high percentage of those SD WAN customers are buying two or three of our products at the same time. And so, the demand for our services is continuing to grow. We do have rerates, we do have the transition from voice technologies and other things as customers move to voice over IP. But we're pretty confident in our ability to win the business.

And Batya, just one other data point. I think if you look at international and GAM, where most of the rerates were, it's down sequentially from fourth quarter, but it's roughly flat to third quarter. So keep in mind, fourth quarter, we had a fair amount of non-recurring favorability. But even with the rerates and first quarter were about flat to third quarter.

And just to follow up on that, you expect another step down in the second quarter and then to -- for more stability in the second half of the year for both on the international and the wholesale segments.

Well, on the international and GAM, I think we'll see some pressure in the second quarter. But to your point, it depends on how much volume offset we see in the second quarter or not. But generally, we feel good about the second half of the year. On IGAM and enterprise. Wholesale, like Jeff said, will continue to have pressure, we have our wholesale voice business there. So wholesale will be lumpy, but on a trend line basis, it will be slightly down every quarter.

And we think we do really well in the wholesale business and think we have a great team, think we have a great network, great assets. And, yeah, it declines over time. But that's the nature of it for the last 10 years at least. And we do pretty well in managing that decline.

Our next question comes from the line of David Barden of Bank of America.

I guess one of the unintended consequences of your announcing this kind of strategic review the same day that they have agreed to be sold, is that we're all going to try to tear apart your business and create a sum of the parts analysis. And if you're kind of putting selling the consumer business or maximizing value or sourcing value in that business, it would be super helpful for us to kind of understand what you guys think the separation of EBITDA is between the consumer and the non-consumer business, so that we can kind of go to work on that, and some of the parts analysis. And I guess the second question would be independent of kind of that review. Thank you for all the disclosures. If you do the math, 66% of your businesses is non-voice, IT transport, IT services. And the other 33% is kind of voice in all the various business divisions and regulatory and other. What are the margins on those businesses, so we can kind of understand as those businesses change and evolve, what they contribute today, what the pressures are that you face from those kind of declining businesses that are the third, that's the voice and the regulatory and the other, the opportunity that is represented by the two thirds, that’s the data and the other services they're growing. Thank you.

Sure, so we'll consider the comment on how do we give you better visibility into the consumer business? I do appreciate that you noticed that we're getting more disclosures. At the same time, as you said, we're not giving enough. But I do appreciate that. With respect to, how I would look at kind of the sum of the parts, one of the messages I’d want you to hear today is that, we have embedded within CenturyLink, assets that have tremendous value that I don't think are being recognized today. And so as you look at some public transactions from private transactions, other things that have gone on in the industry, I think you can look at CenturyLink and go, there's a bunch of assets within CenturyLink, that we're not giving full credit to the value of those things over time. And part of our efforts in the consumer business is to make sure that we're maximizing the value there, but it's also to make sure that we are continuing to focus on the enterprise business, our fiber business, our fiber network and expanding all of those capabilities in the products and services that we sell to the market. With respect to the percentages. I'll let Neel.

Yeah. So I think in terms of the EBITDA from the consumer business, that is going to be part of our assessment and it depends really on where you draw the line. So, as you can think about part of the reason why it's complicated is because we do have a shared network and a lot of shared operations in terms of field, in terms of how we turn off services, et cetera, so that's why it's not as simple question in terms of what the EBITDA is. Again, it depends on what pieces we decide to carve off. With respect to your question on margin, I think a big part of that is not just a direct margin from the decline in the growing services. It goes into our entire transformation of the business. So if you think about voice revenues declining, yes, it’s very high margin, but not only do we take out the variable costs or transforming the entire infrastructure from a network standpoint, we're collapsing voice switches, we're right sizing real estate facilities. So there's a lot of fixed costs that come out of the network. And that's going to be an ongoing effort for us. Similarly, on the services that grow, it's not just the gross margin, because yeah, we're focused on net services, but we're changing the cost structure in terms of how we deliver those services. So in terms of how much customers can turn up services on their own, how much they can do moves, that changes, things like that, all of those things are very OpEx intensive. So it's -- and that's why we focus on the overall EBITDA growth, so it's not just a simple math exercise. It's all the things that we're doing every day.

Okay. So just to be clear, there were no numbers in that answer then.

Well, 128 million is a good example of the kinds of things that we can do from a transformation standpoint, David.

Our next question comes from the line of Mike McCormack of Guggenheim Partners.

I guess just thinking about the consumer business and I guess I won't comment further on, whatever the EBITDA contribution, free cash flow contribution, but I'm assuming there's some sort of connection there with dividend policy. How should we think about that in light of your strategic moves on consumer? And then on the wholesale business, we're hearing a lot about competitiveness from the big two, I guess AT&T and Verizon getting much more aggressive there and trying to win back share. I’m just wondering if you guys are seeing the same thing and whether that's a pressure that you expect to persist, as you talked about a 2Q pressure. But is that going to be a more long lived pressure to you all?

I'll take the wholesale question first. We were in wholesale business day in and day out. I really don't care what any of our competitors do in the market, because we have great assets, great products, great capabilities, an excellent team to execute. And we're going to win the wholesale business, because we were in the wholesale business and people can go do other things. In the enterprise business, it’s a little bit harder because if we're trying to take customers from a big company, and they can do a paper write down and not really change anything, some customers can get by with that for a while. Ultimately, it doesn't work because customers’ needs to evolve to new capacities and new technologies, but our wholesale customers, we don't even see that dynamic. And so, from a wholesale perspective, we win pretty aggressively. With respect to the consumer and the dividend policy and all of that, our dividend test that we announced on the fourth quarter call had to do with reinvesting in our network business, the size of our dividend that we were going to pay going forward to return value to shareholders, and then paying down debt. We'll see if decisions around the consumer business has some sort of impact on that. They had no impact on it right now, whatsoever in any way. And I'm not predicting one way or the other, because I don't even know, as I said, but it will do transactions, what that transaction might look like, what the timing of it would be, we're early in this process and we'll continue to look at it. But recognize that our dividend is important to our shareholders. And we're still returning about $1 billion, little over $1 billion of dividend to shareholders today.

Our next question comes from the line of Matthew Niknam of Deutsche Bank.

Just two for me. One, just to go back on the revenue trajectory. How do we think about the trajectory for year-on-year growth from here on out and I ask it because you talked about sales ticking up, you're obviously going to start lapping some of the unprofitable contracts loss that you shed last year, so I'm wondering how we should think about the revenue growth. Is 5% this quarter the trough and should we anticipate a little bit of improvement from here? And then secondly, on margins, maybe a big question for Neel, you talked about 5 to 7 percentage points of expansion in the past. Relative to when the deal closed, you've obviously got 4 and 60 bps thus far and revenues remain under pressure. So can you help us think about how much incremental room is left on the margin front?

Yes. So, on the margin one, we still feel good about the 5% to 7%, we see enough levers in the pipeline. So when we get to that range, we'll reevaluate it and see if we can do more. But our objective is to continue to grow EBITDA, EBITDA margins and we see enough levers that we feel good about it. In terms of your question on growth, I think the way to answer it, maybe if you look at our international and GAM and our enterprise business, we feel good about the leading indicators that we see. And we expect that our performance -- sequential performance in the second half of this year for both of those business units. In the SMB business unit, we made a lot of operational changes, we're focusing on selling more into our on-net footprint, we're seeing some preliminary signs, but maybe too early to say that that trend will continue. But over time, we expect to see growth in that business, but we can’t say if that’s second half of this year or next year. But in general, those three business units are segments we expect to grow over time. And then consumer, we're focused on the broadband component of that business and then the voice part will decline. And then wholesale, like I mentioned before, will be slightly down. Hope that answers the questions, Matt. And as you know, we don't provide specific revenue guidance.

Our next question comes from the line of Nick Del Deo with MoffettNathanson.

First, some suppliers to the big cloud service providers and hyper scalers have seen a moderation in growth from those customers, like shipping storage vendors and some of the data center companies. You noticed some rerates this quarter, but are you seeing any changes in the underlying purchasing behavior from these guys?

I think ramping them all together and categorizing them all the same may be doing them a disservice. In general, no. If you think about their businesses and what they're doing, and their need for our types of products and services, we're seeing ever increasing demand. If you think about our cloud application management products, that's us, going to the enterprise market to say, we know multi-cloud environments are going to be very real for our enterprise customers, how do we make it easier for you to operate in that environment, we have had connectivity into the cloud providers to do that, we have to have connectivity into our customers to give them those capabilities. But we see the demand there from our enterprise customers and the cloud providers and the hyper scalers. If you think about dynamic connections, and the ability to scale bandwidth up and down and redirect it from one provider to another, those are continuing to grow for our enterprise customers, because the need is continuing to grow from the cloud providers and so I don't see any underlying demand changes from the cloud providers, and I don't see any underlying demand changing from the enterprises that want to get to those cloud providers. Now, as I say that, are there always times when somebody buys a CDN service and then buys 100 gig wave and then by start fiber? Yeah, there's natural evolution of products within those, but I don't see any fundamental demand shifts.

And then, going back to the consumer business, you would consider separating that unit in conjunction with the deal, but decided not to. What's happened since that time that caused you to reconsider? Is it just the performance of the stock price or has something else changed?

No, I don't think we are reconsidering. I think that, my approach has been, let's make it run really well. And then after we get it running really well and after we have a clear outline to the past that we can even take it from there, then let's consider, does it make more sense inside of CenturyLink or does it make more sense outside of CenturyLink? So, I think we've made great progress in doing that. The great news for me, is we have a lot of opportunities left to improve. And I like that, I like the ability to continue to improve that business. But I think our team has done a phenomenal job, as you can see in our price for license initiatives that have multiple benefits, they make the customer experience easier, they take out costs, because we don't have to deal with as many calls from customers, they make the customers happier, because they don't see bill changes. They have multiple benefits from that. And by the way, it's driven ARPU. So we see those types of initiatives, thought that there were a lot of things that we could do, thought it was better to fix them upfront and then evaluate more effectively overtime. I don't think there's any difference in strategy. There's nothing about our operating performance that's causing us to decide we want to sell it. In fact, our operating performance says, hey, doing a good job, keep running it.

Our next question comes from the line of Frank Louthan of Raymond James.

So looking at maybe your data center assets, is that something that you would consider spinning off as well as the consumer are doing a transaction there, I believe you still have quite a bit of space besides what you sold to Cyxtera. And then want to circle back on the outlook for CAF-II, do you expect to be bidding as aggressively in the next round of the CAF funding as in the last one and how successful has that been for you so far?

All right. I'll take the first two. And then, Neel, I don’t know, if you want to answer on how successful. I'll give you give me my opinions on both of these. On data center assets, would we sell data center assets? If we can maximize shareholder value by selling some of our data center assets, we will do that. Yes. If you look at our edge computing strategy, we think there's a great opportunity for us to get very close to the edge of the network. And I'm talking from a latency perspective, 5, 10 milliseconds from all of our customers and put edge computing facilities at those locations. Would we be interested in selling those? Probably not, because we think there's such a great opportunity as the market for those needs evolve, and we have such a unique set of assets to do that. But if there are big data centers in the market, where we think that somebody else can maximize value better than we can, we'd be open to selling it, just like we were when we sold the data center asset to Cyxtera. With respect to CAF-II and how successful or how aggressively we will bid in the rural digital broadband opportunity fund, whatever it's called, I don't know. It’s early. We’ll see. If we've got great footprint and we can expand our footprint, either through fiber or wireless solutions, which was in looking at pretty aggressively for CAF, if we've got a great footprint and we think we can win and we can provide service to customers in an effective way, then yes, we will. And that, I don't know, it's still early in the process. With respect to my opinion on whether CAF-II has been successful or not? I would say yes. I'd say yes. I think it's successful for our customers. I think it's good for our company, it gives us the ability to augment capacities in ways that we wouldn't be able to afford to otherwise. We've obviously, again using wireless technologies and more efficient technologies, looked at ways to get more for less and deliver more for our customers for less capital costs. But I do think it's been good for us. And we've been successful in it.

I think you covered it Jeff. I think, we see pretty high penetration and by definition, these are underserved areas. So we see very high penetration, not only in the actual CAF units, but like Jeff mentioned, what we call the Halo units, the units that are around the CAF units.

Is the penetration higher than your…?

Yes, right. Higher generally.

Operator, I think we have time for one last question.

Our last question comes from the line of Brett Feldman of Goldman Sachs.

Two, the first one is the goodwill impairment charge. Does that increase your NOLs? And if so, does it change the timeline for when you would expect to be a full cash tax payer? And then second, just as we try to get our arms around the consumer business even more, can you give us any insight into the extent to which you deliver services over fiber connections? So for example, how many of your broadband connections are fiber to the home or how many homes passed surpasses fiber, anything like that would be very helpful, thank you.

Yes. So, on the goodwill, Brett, there is no impact to taxes and no impact to NOLs. That’s just write down on goodwill, primarily driven by just over simplify it, has sustained lower stock price and so market cap versus carrying value of equity, no impact on taxes. In terms of consumer, we haven't given that out, the fiber to the home. So, we'll take that into consideration.

So, we do. I mean, our focus is building fiber. Building fiber in places that didn't make sense. And make sense means aerial locations, high density, that's where our micro targeting comes in. And it's not across the market built fiber, it’s very select, where we can build, how we can expand, and then we get very aggressive in how we penetrate that footprint. And we've seen, as Neel said, in early efforts, we've seen some pretty good results there.

Is that one of the things that's been looked at as far as the strategic review, which is should we maybe need to push the pedal harder on fiber? Or do you think that the areas where it's very obvious, you should do fiber, you've already hit from this point forward, it is much more incremental.

Yeah. I think, we're already, we're not changing anything we're doing operationally. So we are leaning in and investing and extending the fiber network. I would also say that even in the fiber assets that we currently have, there is an opportunity to really improve our penetration. And so we're focused on that. To Jeff's earlier point, we're focused on improving the overall operations for the consumer segment. And the strategic review will have no impact or in change of direction. But when we do the review, it'll be a holistic look.

And we're also trying to figure out how do we take the needs of multiple customers and package them together? So for example, our 5G customers, how do we take 5G, package what we're building for 5G in with our enterprise customers and adding new on that buildings? How do we package that in with our consumer customers and can we get fiber closer to our consumers and make it more effective, multiple dwelling units especially come to mind and for consumer. And so how do we leverage all of those customer needs to build the infrastructure. And if that tells us to apply the gas, we will.

And before we wrap up today, I'd like to just conclude with a couple of key points, a few key points. We've been focused on growing adjusted EBITDA and we delivered on that objective again this quarter. We reiterated our full year outlook for adjusted EBITDA and free cash flow. We know declining revenues are always a concern. But we're expanding margins and increasing adjusted EBITDA dollars by focusing on profitable revenue and taking out unneeded costs. We've made considerable progress this quarter on our transformation initiatives and the associated costs savings. We know we have a lot more work and more opportunities ahead. We have a solid quarter of sales and a strong funnel. We're seeing signs of improvement in future revenue performance and expect a better second half of the year. As Neel mentioned, we've made good progress, reducing debt since the closes the Level 3 transaction and we remain committed to our de-leveraging objectives. As we look at increasing shareholder value, we are looking at strategic options to determine the best way to create value with our asset portfolio. In the meantime, we're working diligently to operate the business and maximum efficiency and long term return of free cash flow. And finally, before I conclude the call, I'll remind you that as always, our guiding principle is growing free cash flow per share. Thank you for joining today's call and for your continued support at CenturyLink. Operator, that concludes the call.

Thank you, Jeff. We would like to thank everyone for your participation and for using CenturyLink conferencing service today. This does conclude the conference call. We ask that you please disconnect your lines. Have a great day, everyone.