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[00:00:01] Greetings and welcome to Lumen Technologies third quarter twenty twenty earnings conference call. During the presentation, all participants will be in a listen only mode afterwards. We will conduct a question and answer session at that time. If you have a question, please press the one followed by the four on your telephone. If at any time during the conference you need to reach an operator, simply press star zero. As a reminder, this conference is being recorded Wednesday, November 4th, Twenty twenty. It is my pleasure to turn the conference over to Valerie Finberg, vice president, Investor Relations. Please go ahead, Valerie.

[00:00:44] Thank you, France. Good afternoon, everyone, and thank you for joining us for the limited technologies, third quarter Twenty twenty earnings call. Joining me on the call today are Jeff Storey, president and chief executive officer, and Neil Deve, executive vice president and chief financial officer. Before we begin, I need to call your attention to our Safe Harbor statement on slide two of our three 20 presentation, which notes that this conference call may include forward looking statements subject to certain risks and uncertainties. All forward looking statements should be considered in conjunction with the cautionary statements on Slide two and in the risk factors in our SEC filings. During today's call, we will be referring to certain gap financial measures, which are reconciled to the most comparable gap measures and can be found in our earnings press release. In addition, certain metrics discussed today exclude transformation costs and other special items as detailed in our earnings materials, all of which can be found on the investor relations section of the Lehman website. Finally, I want to remind everyone that the FCC is quiet, period. Rules are in effect for the Rural Digital Opportunity Fund auction nine of four, which began last week. Therefore, any comments we make around AALDEF will be very limited. With that, I'll turn the call over to Jeff.

[00:02:13] Thanks, Valerie. And thank you to everyone joining us today for our first earnings call as women on today's Call, I'll take a few minutes to touch on the third quarter highlights and then go into the launch of women and the opportunities we see ahead. After that meal, we'll review our third quarter financial results and then we'll open up the call for your questions. We delivered another solid quarter, improving our year over year revenue performance and delivering sequential EBITDA as we continue to transform our business, customers rely on Lumen to enable their digital transformation. And we're seeing that in our sales trends. Following a strong second quarter, sales for Gian and enterprise segments were good and sales were up, and customers were in line with our expectations. We're encouraged by the steady demand we see but expect sales cycles will continue to be affected by the uncertain environment, particularly for SMB customers. We delivered another strong quarter for consumer broadband revenue with both year over year and sequential revenue growth and recorded our 11th consecutive quarter of growth in broadband. This quarter, we added 46000 gigabit subscribers, surpassing the record we said last quarter. Our results confirm our thesis for the consumer business. We win customers where we invest in fiber, simplify the experience, and use microtargeting in selecting the areas we serve. We believe our consumer fiber offering is the best in the market and our customer satisfaction results are showing consumers value dedicated and reliable bandwidth. As you've heard me say many times, our operational improvements lead to highly satisfied customers, more durable revenue, and they allow us to reduce the cost of our operation. [00:04:18] Our relentless focus in these areas is delivering results. You can see in two ways this quarter.…

[00:17:48] Thank you, Jeff, and good afternoon, everyone. During the third quarter, we continued to execute on our plan and made substantial progress, transforming, and positioning the company for the future. As you mentioned, we rebranded to Lumen and made a purposeful shift in aggressively going after emerging opportunities with growing addressable markets. We have solid third quarter results, which highlights the resilience and relevance of the products and services we offer, particularly given the current backdrop of economic uncertainty. I'll start with our financial summary on slide eight, total revenue performance improved compared to the year of the quarter. We have another quarter of steady progress on our cost transformation savings initiatives, while we incurred higher costs due to seasonally high utility expenses, a global brand launch and the cost and efficiencies of operating in the current environment, we grew adjusted EBITDA on a sequential basis. We continue to invest in the business while delivering solid free cash flow during the quarter. We also made good progress on our on our deleveraging and refinancing initiatives. Turning to revenue on a year over year basis, total revenue declined three point four percent to five point one six seven billion, compared to a decline of four point eight percent in the third quarter of 2019 sequentially. Total revenue declined zero point five percent. Moving to Slide nine in Revenue by Business segment on a year over year basis, international and global accounts, or IDM revenue declined three point six percent and decline two point six percent on a constant currency basis, primarily driven by covid resurgence and related weakness in our international business. On a sequential basis, AM declined one point six percent and two point four percent on a constant currency basis. [00:19:48] We continue to see good demand from…

[00:30:15] Thank you, if you would like to register for a question, please press the one followed by the four on your telephone, you will hear a three tone prompt to acknowledge your request. If your question has been answered and you would like to withdraw your registration, please press the one followed by the three. And our first question from the line of Brett Feldman with Goldman Sachs, please go ahead.

[00:30:40] Yes, thank you for taking the question, just to follow up on the EBITDA guidance you gave for the fourth quarter, the outlook for sequential improvement. I'm wondering if you can maybe just give us a little more insight as to what you expect to drive that. I'm not sure if that's predominantly seasonal or if there are other factors involved. And you would also highlight that the year over year change in EBITDA and revenue, I believe, has improved this quarter. Are you expecting a similar dynamic on a year over year basis to play out in the fourth quarter? And if so, what's behind that? Thank you.

[00:31:13] Sure, but also in terms of fourth quarter, obviously, we've got a good quarter for our cost transformation savings, and so we expect that to continue going into the fourth quarter. And, you know, offsetting some of that savings are some of the investments that we're making. So we are making you've seen us spend a little bit more on capital. We have some early investment in the brand and investment in our products and services, a lot of which Jeff touched on in his in his remarks. Utilities will come down, which is seasonal. We expect that to continue to come down and the remainder will be driven by our performance on revenues. So at a high level, that's kind of the primary driver from us. At one EBITDA performance standpoint, from a year over year, we did see good improvement in revenue, like I mentioned, three point four versus the four point eight. We have a good funnel and, you know, we feel good about the quarter. But the only thing that we're a little cautious about, some of the resurgence we're seeing and how that impacts customer activity.

[00:32:30] If you don't mind, if I get one quick follow up question on that, you referenced the funnel, I believe, last quarter in Enterprise. You had called out very strong bookings. I think it was a year on year improvement from what had been a very strong second quarter in 2019. How much of that ended up actually converting into the revenue run rate that we saw for Enterprise in the third quarter? Is it all there or could there still be a little benefit that would flow into the fourth quarter? Thank you.

[00:32:56] A significant part of that was already installed in the third quarter. So you can see the benefit in the enterprise line item.

[00:33:06] They are taking the questions.

[00:33:10] Our next question is from the line of Simon Flannery with Morgan Stanley. You may proceed.

[00:33:17] Thank you very much. Good evening, Neal. On the transformation, I think you said you have good progress, 730. You know, you're close to the low end of the range at 800, but there's plenty to go on the billion. Perhaps you just update us on what you think the potential is over the next year or so to get maybe to the higher end or even above the higher end. And I know covid had limited some of your ability. It sounds like you're back on track, but any color around there? And just one clarification on the broadband. You were talking about the keep America connected impact. Could you just have sized that for us? How much of the impact was from that? Thanks.

[00:33:54] Sure. So on the cost savings, Simon, I think like we mentioned, we were very comfortable with the 800 to a billion will suddenly get there, but it's not going to be an ongoing effort for us. So all the areas that we're going after and how we're changing the customer experience and the employee experience, that will be a several year effort, similarly on rightsizing the infrastructure as we see declines in legacy revenues, that's also going to be somewhere several year afterwards. So we don't really see, you know, any limitations in terms of the savings that we can achieve over the next handful of years. In terms of your question on keep America connected, Americans connected, what we're doing is really for the non-pay customers who are working closely with or observing the revenue. And you don't see it on our units either. So incrementally, it impacted our units by about 35000 units.

[00:35:07] And just one clarification on the Lumen new business divisions, are you going to give us some color around what the quantum kind of financials are, how the different businesses split out along that kind of those silos? Thanks.

[00:35:24] Yeah, we'll have more to say about that when we report fourth quarter, but certainly we're thinking through what's the best way to give you visibility to where we're seeing traction.

[00:35:38] Our next question is from the line of Eric with Wells Fargo. Please go ahead.

[00:35:45] Thanks for taking the question. So I was curious about the Zoom partnership that you mentioned and that was announced in late September, you know, how much should we expect that to positively impact your voice and collaboration revenue line item? And then, you know, also, should we see an incremental benefit as well in your network transport business?

[00:36:05] So it's still early days, but if you think about the Zoom partnership, we view it as a synergistic partnership where, you know, the capabilities that we bring to bear really enhances the experience. And it also helps us have an app that we can utilize to really address what our customers want from a voice and video capability. So over the long term, it'll help us have an alternative for our voice and collaboration, and we hope to use that to mitigate some of the churn in that business. also, keep in mind, when customers use Zoom or Microsoft teams or any other voice app, there is a corresponding demand on the underlying network infrastructure. And with a broad set of products and services, we usually lean into those upgrades as well. So there are several benefits.

[00:37:00] And I'll just add, if you think about our approach to partnering and our approach to the platform, it's an important capability to have for us to have on the woman platform. So we're working with them. But it's not something that we've just started over the last couple of months has been a great partner to us. We've been we've been a good provider to them, I hope, over the past few years. So we've got a very good deep relationship. And I think they do an amazing job for their customers. And we're happy to have the ability to add those capabilities to our platform as we go directly to enterprises with the variety of services.

[00:37:42] Great, and I said one more follow up, you mentioned that Europe and China have of sales activity in the quarter. So just wondering if you could provide some more color, whether you think that's a temporary phenomenon. And if you see any sign, you know, in the next quarter or two to that, that will reverse and, you know, sales will return to a normal cadence. Thanks.

[00:38:01] You know, if it was I think it was a little hard to hear the question, but I think it was around the weakness we saw in India and a lot of so if you think about it, the covid related shutdowns in Latin America, there were about a quarter or so behind North America. And so it really impacted third quarter in terms of reduced levels of activity and for there's the resurgence maybe, you know, halfway through the quarter, if you will. So we really think that's really the primary driver. And we'll see how it goes over the next 10, 15 months. But really, that's what we see as the primary driver. As things return to normal, we expect things to pick back up.

[00:38:49] And I think that's coming. Certainly, that applies to Europe and in Latin. But really our overall business, there's near-term uncertainty associated with the economy and with covid and all of those things. But the fundamental drivers of our business, our customers need to acquire, analyze and act on data. We don't see that changing. So as we couple the looming platform with one of the world's best cyber infrastructures, we think those capabilities are very relevant going forward, very important to our customers. And this near-term uncertainty will get past.

[00:39:29] Great, thank you.

[00:39:32] Our next question from the line of Nick, I'll deal with Muffat, Nick Denton, please go ahead.

[00:39:38] Thanks for taking my questions. You know, Jeff Lumen seems to be making it through the recession, you know, in better shape than many would have expected. You know, when we when we're going into it know as we look ahead, how does that influence your view of the likely trajectory of the business and your goal to be in EBITDA growth company?

[00:39:55] Well, we're investing through this, one of the things that we were very pleased about is, is that as a result of some of the decisions we've made over the last couple of years, we're in a great position to keep investing. So if you look at our cloud edge strategy, we're deeply investing that Neil referenced in one of his answers a minute ago, that we're investing in people. We have hundreds of people dedicated to cloud edge to make sure that we have the right capabilities in place for our customers. So we're investing through this cycle, looking at how to continue to grow the business. And again, we see the looming platform as exactly what our customers are needing to help them usher in the fourth industrial revolution, but really deal with the quantity and the amount and the distribution of data. We know that they want the advantages of being able to have compute resources within a few milliseconds of where that data is created. And so our edge compute capabilities. But we also know that they want to be able to transport that data to any cloud service provider, any software as a service provider. And that's where our dynamic connections, which is essentially a network as a service product, are dynamic connections helps them. And so from a from a going forward perspective, we think that the products, the capabilities that we're layering on top of the great fiber and network infrastructure that we have in place today really positioned us to grow revenue and will continue to focus on that.

[00:41:36] Ok, and then I also have three quick housekeeping ones for Neil, so first, last quarter you said the pandemic related calls for the low tens of millions to dose decline in this quarter. And what are you expecting next quarter? Second, what was the rebranding cost this quarter? And third, you know, looking at enterprise in enterprise transfer and infrastructure, revenue is up about 10 percent sequentially. Is that just a function of the installs you called out or something else going on?

[00:42:04] So they got think on the pandemic related. It's really a high level estimate, if you think about it, there is a lot of inefficiencies are operating in this environment. So I think tens of millions is probably right, tens of millions. It's a similar amount on the branding side. But the important thing to keep in mind is that, as you can see, with a sequential EBITDA growth, these are not net incremental, are offsetting that with other savings. Similarly, on the branding front, we're not going to slow down. We're going to continue to invest in the brand for next several quarters, probably at similar levels, but will be offsetting that with savings elsewhere. So that's been our approach in terms of the products, it's mostly installs. There's always a role, but a one time in settlements and wholesale and another, you know, especially in the wholesale segment. So there are some fluctuations driven by that.

[00:43:05] Ok, thanks for that detail.

[00:43:09] Our next question from the line of Phil Cusick from JPMorgan. Please go ahead.

[00:43:16] Hi, guys, thanks first, Jeff. I think you sounded a bit ominous on SMB in the prepared remarks, Neal said the churn hasn't picked up, but can you expand on what you see in payment trends and new activations? And then, second of all, to hit a topic we've had a bunch of times in the past. But the fiber build out in consumer. You talk about microtargeting, but there's a difficult history for companies that have cherry picked parts of their markets, getting to their target penetration. And an increasing number of those are post-bankruptcy, pushing fiber much harder and building planning to build their entire footprint. Why doesn't this make more sense for women? Thank you.

[00:43:59] Sure. First of all, I don't want any of my comments around SMB to be interpreted as ominous. And so if I said something that sounded ominous, I didn't mean that. Let me tell you what I what I did mean, which is we're not seeing massive churn pickup in SMB. We're seeing that the infrastructure we provide is absolutely critical to keep them in business and to support their businesses. But we're not seeing a lot of sales activity either. If you look at our plan to grow quantum fiber outside the legacy CenturyLink footprint and brand new buildings, you know, we're going to have to wait for some of those customers to get back in the buildings before selling new services to them. So there's nothing ominous going on. But we do think it creates uncertainty in the near term for them from a sales cycle. And we're very pleased with the churn level that we're seeing and our activities to support those businesses. And we're being cognizant of the fact that they're going through a hard time, that nothing, nothing more than that. Before I go to the cherry picking, the one that.

[00:45:12] I would just note that if you look at our third quarter year over year revenue, it was down five point eight percent. And if you look at the average of the prior four quarters, it was roughly about six. So if you really have to put Jeff's comments in the context of the turnaround plan that we have for SMB, so we're a little disappointed that we're not making as much traction because of the focus and investments we've made on SMB. Not so much from a performance standpoint, because somebody has been holding up fairly well. And also on the payment terms question, I think, you know, we're there's no issues that we feel good about that.

[00:45:54] And with respect to cherry picking, I don't I wouldn't describe what we're doing is cherry picking. We're looking at where we can get the greatest return on our investments and the fastest return on our investments to drive penetration. And so that it's a smart strategy for building out rather than just going out and building out an entire footprint. Let's look at what makes sense for our business to help us prioritize how to grow and where to grow that that investment. And so I don't I don't view it as cherry picking. I on the on the small business side. We have 170000 buildings that are let in in our footprint. I definitely want to go to every one of those buildings and focus on our business customers in those buildings. And so we'll take advantage of where our network is strong and where we can make it even stronger to support those types of customers. And we have plenty of market opportunity to do that. There's not a limitation right now. And that's on where to go and build for our long fiber business, whether it's consumer or business customers.

[00:47:07] Thank you. Thank you so.

[00:47:10] Our next question is from the line of David Barden from Bank of America may proceed.

[00:47:17] Hey, guys, thanks so much for taking the questions. I guess the first question I have is related to kind of the voice collaboration in aggregate. I think that last quarter this was the most surprising category of revenue to the upside it seems to have contracted. I wonder if you could kind of give us a sense as to the color of whether this contraction from quarter to quarter, from the peak in to Q is it like how that is going to evolve or how do you think it will evolve? And then I guess the second question is specifically related to the biggest upside surprise this quarter was the transportation infrastructure and enterprise. I know there were some one timers, but could you kind of elaborate a little bit about how that outperformed and what the outlook for that division might be? Thank you.

[00:48:21] So, David, I think if you boys and collaboration is not a surprise to us, if you look at our, you know, go back and look at our comments from last quarter, we said that we expect that it wouldn't last because a lot of the ramp up in volume was covid related as folks started working from home, etc.. But the key point is the environment that we're in needs more collaboration, and that is more traffic. So when folks stare up their traditional voice networks and see a huge spike in volume, they figure out how to support that in different ways, that traffic transitions to Microsoft's teams or Zoome, etc. But there is an underlying need to upgrade their network infrastructure, and that's where we come in with a broad product portfolio. So we've been helping. So you'll see that transition within our portfolio in terms of more connectivity needs the customers need. Now, it's not one for one, but it definitely drives demand for other products and services. And we expect that to continue going forward as a trade-off of legacy voice and into other infrastructure products in terms of transport and infrastructure. There is, you know, four, given the broad product portfolio that we have in any given quarter, we'll see fluctuation in one versus the other. But in general, that's out of business. The products are doing very well for us.

[00:49:56] Thanks, Neal and Jeff, if I could ask you one kind of follow up question, I know you went through this process, but there's been an extraordinary interest in fiber assets, a very healthy level of transaction volume in companies and assets themselves. I know you went through this process in 2019 to try to identify whether there was a way to extract value. Are you open to that process? And do you think that there's a maybe a renewed opportunity to try to extract value from the company in that way?

[00:50:37] We're always open to whatever makes sense for our business. I won't make any comments on a particular piece or not, but yeah, we're open to it. We continue to look at it. We think we have great assets. We think we have the ability to invest, to grow these assets, whether it's on the consumer side or on the enterprise side. And so we're going to continue to do that. If something is some other structure, some point makes sense. We'll look at that to.

[00:51:06] Great. Thank you, guys.

[00:51:09] I guess our next question is from the line of James Ratcliffe with Evercore ISI, you may proceed. Mr. Radcliff, your line is open, sir, you may proceed. So you hear me? Yes, yes, yes, yes.

[00:51:32] Great, thanks for taking the question, Jacqui. Talk to me about EJ and the opportunity there and your take on what truly is Edge comb cute and edge opportunities and how much of that breaks down to really caught quietly at the South Side versus neighbourhood, city, state, etc., and how you're looking to position your network against the banks?

[00:51:58] Sure. First of all, from this is third party stuff. So you can take it. You have to take their third parties. It's estimated it's a broad range, but it's estimated to be somewhere between 10 and 40 billion dollars’ worth of opportunity over the over the coming years. So we think it's big. What it means, though, is. We've centralized computing for a very long time, moved it into the cloud, which centralizes it even more, moved it away from where that data is actually acquired. And what we see from enterprise customers is they need to move that compute resource back closer to where the data is acquired so that they can analyze and act on it faster without having to transport it around and move it around. And so I look at edX and think it gives the benefit of on premise computing. We're very close. We can serve 95 percent of the US enterprises within five milliseconds of delay. So we're very close to where that data is actually created and we're where it needs to be analyzed. So it us the benefit of on premise computing with also the benefits of cloud computing because we can move it into a cloud environment. They don't have to have their own data center. We can do it virtually. We can do it on physical machines. We can do we can provide their compute resources in a variety of ways. And so if you look at the presentation on slide four, we can orchestrate for our customers and help them control their applications and operate their applications very close to where the data is created in a very efficient and effective way. So that's what Edge really means in our Lumen platform is focused on that. But our ultimate platform is focused on providing those capabilities, whether it's in the edge or in the network itself. So if you think about dynamic connections, dynamic connections, is that network has a service capability that I mentioned. If you're an edge compute customer and you want to redirect your computer resources from one data center to another or one cloud provider to another, you can use that if you're not an edge computer customer, but you're using other capabilities of Lumen, you can use that same capability to control your network in a very seamless, very effective way.

[00:54:31] Thank you, sir.

[00:54:34] Our next question from the line of John Atkin with RBC Capital Markets and EPS, thanks very much.

[00:54:42] So a couple of questions on that very last topic. I wondered if you are entertaining or how far along you are in terms of actual product partnerships with, you know, BW wavelengths or how Post or Azure stack like some of your other kind of fiber and wireline brethren are. You talked a lot about these themes. And I think in a very good semantic explanation for your approach when it comes to prioritization, where are you on that roadmap? And secondly, in the fiber front, there's been some change in the industry at one of your, you know, national fiber peers organizationally. And if that has it created any sort of opportunity to take advantage of any of the disruption to possibly gain share in the Enterprise segment? Those are bunch questions.

[00:55:32] Sure. Let me take the first question, Neal. You might want to come in on the second one from a product and partnership. We are, you know, continually developing the capabilities of the Lumen platform, making sure that we are bringing the best of breed partners to the table. I mentioned Zoom's in the prepared remarks, but I also mentioned VMware and our cloud and our capabilities that we're delivering with them. So we will continue to partner with companies that we think bring kind of a dual advantage to Lumen. One, they utilize our services. But secondly, we can drive network capacity and. Success in the network business from then selling through the looming platform, but then also we can provide those same capabilities to our customers and productize those capabilities with our customers. I am not ready to announce other partnerships. That that's a key part of our strategy is to go out and build relationships with companies and partners that are doing these things. And I expect us to be able to offer artificial intelligence and augmented reality and various capabilities on the looming platform through partnerships and relationships with other companies.

[00:57:01] John, on your final question, we didn't completely hear it, but I think it was around the competitive landscape. We haven't really seen any change in terms of the competitive landscape for fiber. As you know, we you know, we have really good assets there and we were doing very well from that standpoint. So was that your question or do you want to do you have a follow up?

[00:57:26] No, that that's fine. I appreciate your perspective.

[00:57:32] Thank you.

[00:57:33] Our next question from the line of Michael Rollins with Citi is. Thanks.

[00:57:41] Good afternoon. Two questions, if I could, just first, a clarification on the consumer broadband business. Can you roughly segment out the subscription mix, four point six million, roughly broadband subs between the different speed cheers to kind of put into context the different sequential changes that you experienced in the quarter. And then secondly, just looking back at history in the business market, can you review for us you know how and when during the last recession where your business revenues meaningfully impacted from that environment and maybe how the current environment could be similar or different to what you saw? I realize it was a long time ago, but, you know, the. Probably, you know, I would imagine one of the frame of reference is that that you may consider as well as you navigate the current environment. Thanks.

[00:58:39] Sure. So I think your question on consumer broadband, I think what I will say is if I just step back, we've been really focused on really improving the quality of the overall revenue base for consumer. And you can see that in our revenue numbers, our revenue has been growing. And as you have mentioned, our has been growing. And I mentioned in my prepared remarks that four hundred meg and above we're now 13 percent of the base is at that speed compared to it was the beginning of last year at about five. So that part of that business where we're investing and we know that's a very competitive asset, it's growing very fast and we continue to invest in fiber. If you look at our average ARPU for that entire revenue base, it's in the mid-50s and the new sales that we have, a 100 plus man is at the very least come in at 30 percent or more higher from a new cell perspective. So we'll continue to focus on improving ours. You layer on top of that, the KAFTA SOPs that we have where we see high penetration as we build and penetrate. And you layer on top of that are rural SOB's where there are a lot of alternatives. Overall, the quality of the revenue base keeps improving every quarter. So we'll be we'll continue to focus on that and continue to focus on improving the revenue trajectory. Not to mention, like I mentioned in my prepared remarks, we're investing in the customer experience and self-service capability. So the margin profile of that business will also continue. In terms of your question on the last recession, you know, we've gone back and looked at it. But the reality is the environment today is very different. If you think about connectivity and how important that is to businesses, we just don't think there's really that many parallels to draw from any prior recession. So we think even in a recessionary environment, connectivity for businesses will continue to be very important.

[01:01:01] And actually, if you look back, I remember sitting on calls with you guys and ladies back then and answering the question that, you know, it creates near-term choppiness and near-term uncertainty, that there's no change in the demand for our products and services. That's how it worked out last time. That's how I expect it to work out this time, not because it worked out that way last time, but because we see the same dynamic, we see the same experience from our customers.

[01:01:35] Our next question from the line of Batya Levy from UBS, please go ahead.

[01:01:40] Great, thanks. Thank you. A couple of questions. First, a quick one on cash. Taxes have remained very low. Can you remind us when you expect to be a full taxpayer and a little bit more high level as you invest to grow and transform the business? Can you provide a bit more color on your on our starting point for the revenue mix? Do you still look at the current mix today as a certain mix coming from legacy products and will continue to decline? But you are investing in new capabilities, which is growing substantially. What where are we in terms of that mix difference? And also as you look at your new segments. Can you talk a little bit about how the network cost will be allocated between these segments? Do they stand on their own or do they will they have a shared infrastructure?

[01:02:36] So I'll start with your question, but on the past taxes. You know, we don't expect to be a material taxpayer for the next two to three years, so we have to analyze that. So, you know, that's the outlook right now in terms of revenue mix. The dynamic you describe is absolutely right. We will continue to see erosion in legacy products and that will continue. But what we are doing is given the infrastructure that we have, the fiber infrastructure that we have, we're investing in products and services with close affinity to that infrastructure that leverages that infrastructure. All the things that Jeff described with emerging growing addressable market opportunities that we hope to gain, you know, good traction on that will be a different vector in terms of driving our revenue performance going forward. So that that, in essence, is what we're focused on in terms of the segments. We'll get that more thought in terms of how we report next year, and we'll have more to say on our fourth quarter earnings call.

[01:03:51] Ok, thank you. Thank you.

[01:03:56] France, I think we have time for one more question.

[01:03:59] Very good. Our last question will be from the line of Frank Lauthan with 17. Please go ahead.

[01:04:07] Great. Thank you. How big can the quantum get in terms of revenue? What's of the TAM there that mostly a light footprint strategy or is it also out of footprint? If it's out our footprint, how aggressive will you be in expanding the out of territory? Thanks.

[01:04:25] Yeah, without getting into specific tabs, it's a strategy in footprint and not a footprint where we have the ability to win and where we have the ability to build infrastructure. So if you think our footprint for consumer in the U.S. are a natural for us. We've done some work with cities that are outside our footprint to grow networks with them. And so it'll be opportunistic from a consumer basis outside of our legacy like footprint and then obviously inside our legacy footprint. If you look at quantum from a business small business perspective, that's about that's looking in the legacy like networks and the customers that we serve there. And it's looking at the all the buildings that we have that are lit and could be lit to provide services to those customers. So it's a little bit of a mixed bag between the two.

[01:05:30] All right, great. Thank you. Thanks for the last question and thank you, everyone, for your questions actually. And before we conclude the call today. Now summarize with few thoughts about the future of Lehman. First of all, we believe the Lehman platform writing on our deep and extensive cyberinfrastructure positions us really well to help our customers navigate the fourth industrial revolution. We are investing in growing addressable markets that we believe will improve our revenue trajectory over time. Our capital allocation strategy continues to strengthen our balance sheet, reduce our interest expense, and is aligned with our guiding principle to grow free cash flow per share. Our strong liquidity position enables us to invest through this cycle and through all of this activity. Our dividend remains in a very comfortable position with a payout ratio in the 30s. I appreciate everybody joining the call today and thank you for your interest in Lumen, operator. That concludes the call.

[01:06:40] Thank you. We would like to thank everyone for your participation and for using the Lumen Technologies conferencing service today. This does conclude the conference call. We ask that you please disconnect your lines and have a great day, everyone.