2021 earnings conference call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct the question-and-answer session. [Operator Instructions]. As a reminder, this conference is being recorded, Wednesday, November 3, 2021. It is now my pleasure to turn the conference over to Mike McCormack, Senior Vice President, Investor Relations. Please go ahead, sir.

Thank you, Florence. Good afternoon, everyone, and thank you for joining us for the Lumen Technologies third quarter 2021 earnings call. Joining me in the call today are Jeffrey Storey, President and Chief Executive Officer, and Indraneel Dev, Executive Vice President and Chief Financial Officer. Before we begin, I need to call your attention to our Safe Harbor statement on Slide 2 of our third quarter of 2021 presentation, which notes that this conference call may include forward-looking statements subject to certain risks and uncertainties. Also, all forward-looking statements should be considered in conjunction with the cautionary statements on Slide 2 and the risk factors in our SEC filings. We will be referring to certain non-GAAP financial measures, reconcile with the most comparable GAAP measures that can be found in our earnings press release. In addition, certain metrics discussed today exclude costs for special items as detailed in earnings material. All of which can be found on the Investor Relations section of Lumen website. And with that, I'll turn the call over to Jeff.

Good afternoon, everyone. And thank you for joining us. On today's call, I'll provide a few thoughts on our third quarter results, an update on our recently announced transactions, a review of our key capital allocation priorities, and outline our investment plans as we continue to position the Company for long-term, sustainable revenue growth. I'll then ask Neal to discuss the third quarter in more detail. And of course, we will reserve time at the end for your questions. We're pleased with our third quarter sequential revenue progression. In fact, we showed sequential growth in both IGAM and large enterprise, showing the resilience of our business as COVID related headwinds begin to diminish. We're also pleased with the continuation of the strong sales that we saw in the second quarter and our growing channel, which should provide a strong foundation as we drive towards growth. Overall, it's an exciting time for Lumen as we continue evolving and transforming the Company for long-term growth. Our Lumen Platform continues to resonate with customers and is the cornerstone of our digital transformation for enterprises. In addition, I believe our Quantum Fiber platform is unique in the market, and not only drives an enhanced customer experience, but also drives revenue growth and even lowers the operating cost for our Mass Markets segment, improving the profitability and sustainability of the business. I'm excited to discuss the investments we're making to drive Enterprise and Quantum Fiber growth, but let me start with an update on our previously announced transactions. The sale of our 20 ILEC states and our LATAM business are important steps to positioning our Company for the long term. Those transactions materially changed the mix of our business operations, which will amplify and accelerate the positive outcomes for our focus investments in our retained…

Thank you, Jeff. And good afternoon, everyone. As Jeff said, we're very excited about the transformation of our Company and our plans to drive future growth. Let me begin with our financial summary. For the third quarter of 2021, IGA and Large Enterprise sequential revenue performance returned to growth. We again delivered solid adjusted EBITDA and expanded margins year-over-year. Cash flow remains robust, providing the flexibility to support our capital allocation priorities. With respect to capital expenditures; Enterprise customer demand has been centered around existing on-net buildings and less capital-intensive, higher-level services. We are also seeing benefits from our continued focus on capital efficiency initiatives. As a result, we are reducing our capital expenditure guidance to be in the range of $2.8 billion to $3 billion. Note that as we transition from micro-targeting to a market-based approach for Quantum Fiber, and enterprise decision-making, our new network deployment accelerates. We expect capital expenditures to ramp going forward. We remain confident in our EBITDA guidance range of $8.4 to $8.6 billion. And as a result of lower capital spending and lower net cash interest expense, our new outlook for free cash flow is $3.6 to $3.8 billion. Turning to revenue, in the third quarter, total revenue declined 5.4% on a year-over-year basis to $4.887 billion. It is important to remember that year-over-year metrics were meaningfully affected by COVID-related demand last year, making comparisons less relevant. From a sequential perspective, total revenue declined by 0.8% an improvement from the 2.1% sequential rate of decline in the second quarter. Business revenue in the third quarter declined 0.4% sequentially, versus a decline of 2% last quarter. On a year-over-year basis, revenue declined 5.1% to $3.508 billion. Normalizing for the sale of the correctional facility business in the third quarter of last year, the decline was…

Thank you. [Operator Instructions]. You will hear a three-tone prom to acknowledge your request. [Operator Instructions]. Our first question is from the line of Brett Feldman with Goldman Sachs. Please go ahead.

Thanks for taking the question and thanks for all that color. We've been getting a lot of questions since the last call about this plan to maintain operating business in a way that would seem leverage neutral. And I think the assumption a lot of investors had is that inevitably we need a very meaningful uplift in investment, and as a result, might change the way you would approach dividend. If I -- listening to the comments you laid out for us today, I think maybe the interpretation at the ball is a little better or have been improved. And I think that what you're seeing is you're comfortable keeping your Balance Sheet at its current level of leverage in order to fund your entire capital allocation program, be that dividend potentially buybacks, as well as the capex program. And it's not as if the Balance Sheet is specifically funding any one of those things, but the collection of those things combined. Is that the right way to understand what you've articulated for us today?

Yes, Brett. Thanks for the question and I think that's right. If you listen to our comments -- our prepared comments, we noted that our 2022 plan is fully funded and while it's way too premature to talk about things beyond that, there are a number of levers that we have. We've been improving our capital efficiency. You saw that in this year's results. We'll continue to look at non-strategic assets that we can divest, if that makes sense. And our capital spend is evolving. We're not necessarily spending on certain capabilities where the heavy lifting is already behind us. So, a lot of our transformation capabilities and other things. And so, there are a number of levers that we believe that are the 5 key priorities that I outlined earlier and they're in the investor presentation are the key things for our business and we think we have the funds to do them all.

If you wouldn't mind if I just ask a bomb question about the fiber deployment. I think you've identified something like 12 million locations that you find attractive for passing the fiber. I think there's going to be 21 million locations in the remaining properties, so there's going to be another $9 million or so that are not part of the immediate plan. Any views on how you intend to operate that portion of the footprint going forward, or would that be on the list of things you may also explore strategic options for?

Yeah, we're opened to a number of outcomes. What I -- what we will do immediately is continue to operate them to provide a great customer experience, to retain the business to -- as much as we can, and to manage it for cash flows the way that we've been managing some of that. And so, you are right, there's something like 21 million homes in our overall footprint and we will continue to figure out how best to optimize those homes for free cash flow over time. And Neil (ph.), do you want to add to that?

If you take it.

Yeah, the only thing I'll add, Brett (ph.), is the $12 million is a view right now based on all the work and analysis we've done. But as the technology evolves, we're always looking at different technologies. That number could grow over time as we continue to build out.

And the $15 million, just one last clarification, was the homes that we thought were in urban and suburban areas. The locations in urban and suburban areas. We'll continue to manage the overall business for free cash flow likely done. We'll continue to manage it to provide a great customer experience so that we keep our customers happy and they stay with us.

Thank you.

Sure.

Our next question is from the line of Eric Luebchow with Wells Fargo. Please go ahead.

Thanks for taking the question. Just following up on the consumer Fiber investment opportunity. Any parameters you can give us on how quickly you think you can get to 12 million homes, 5 years, 7 years? And how much of that will be impacted by the decision to keep the dividend in terms of your ability to lean more heavily into capex in the coming years?

So, I haven't sort of spend exactly how many years this is but I can give you some rough figures that I gave in the previous comments which we -- we do about 400,000 homes today with our micro-targeting approach. We've been working to ramp our capabilities and expect to do something like a million homes next year in 2022. And then by the end of the year, being at a run rate of about a million and a 1/2 to 2 million homes per year. And so, we'll work that out. It's going to be more driven by the mundane things associated with building infrastructure than any other constraints. But -- though we think that we've got a great team with experience, with capabilities. And we're very high confidence in our abilities to hit those numbers and grow the business aggressively.

Great. And just one more for me. I think you mentioned, correct me if I'm wrong, that you expected that you could return to revenue growth in 2 to 3 years. So, maybe you could provide us some color on your pathway to get there. Is there an expectation, obviously, that Consumer Fiber is growing meaningfully? I assume that's the case, but also that some of your legacy declines, improve, or that you improve the revenue trajectory on the enterprise side as well.

Yeah, so first of all, there is the improving mix as a result of these transactions that we've done and we'll look at additional asset rationalization is possible which we would expect to improve that as well. And we believe in our products and our capabilities. We've been working hard for the last couple of years to build out our capabilities across a broad platform of services. And we're focused as a Company. We are a Fiber platform Company. If you listen to the earnings calls of our competitors, you'll hear about theme parks, and television networks, and wireless spectrum auctions. When you listen to Lumen, you hear about two things: fiber, and how we use our platforms to seamlessly integrate our capabilities within our customers' businesses, or within our customers' home. So, it's fibered enterprises, it's fiber-to-consumer, it's fiber to small and medium business, and it's the platform in which we deliver those to create a unique and differentiated experience for our customers.

Great. Thank you.

Thank you.

Our next question is from Phil Cusick with the J.P. Morgan. Please go ahead.

Hey, guys. Thanks. I wonder if you can talk about the enterprise funnel early in the year. The hope was that things would ramp up and help revenue in the back half. Where are we, and any one-timers in revenue this quarter? And just to push this a little bit, you are maintaining the dividend. You ran through the buyback really quickly. Accelerating investment over time, the revenue this year didn't come through the way you expected earlier in the year. And it seems like you have a lot more confidence in the improvement and the business and it's justified by the results this year or investors believe in. So just help us think about what you're seeing in the business that's different than what's coming through on the results maybe. Thanks very much.

Sure. Thanks Phil. Let me start with Enterprise sales. We're pleased with our sales momentum in the third quarter. Nothing's ever linear and it's lumpy sometimes in our business. There's seasonality. There are other factors that go into it. But if you look at IGAM, our International GAM business, and our Large Enterprise, they were particularly strong. And so, we're pleased with the momentum that we've seen. The funnel has been building since about midway through the first quarter. So, we've seen the funnel return to our pre -pandemic levels. we continue to augment our products and capabilities. We believe the Fiber Infrastructure we have is a unique value proposition -- brings unique value proposition to our customers. And so, we're pleased with our competitive position and our ability to take share moving forward. Moving forward again, nothing's ever linear, but we have high confidence in our revenue growth and its part of the reason you did see us go through the buyback so quickly. We absolutely believe that our business is undervalued. And I've got data points that I can point to. We've done the sum-of-the-parts analysis for you before. If you look at the sale of 20 and out of region, small high life estates, we sold those places. We were not investing. So, you would expect to be at a lower multiple than the places where we were investing. We felt those for 5.5 times Adjusted EBITDA. And so, we think that was a very good valuation for that business. If you look at LATAM, we sold it for 9 times EBITDA, and we think that's a good valuation for that business. If you look at the RemainCo within Lumen and the context of that, hopefully, you can see why I think we're still undervalued. Then if you couple with that, our confidence in our ability to grow, our confidence in the investments that we're making in Quantum Fiber, our confidence in the investments that we've made in edge computing, edge storage, managed services, the platform to deliver all of our core networking services or security capabilities. If you look at those things combined together, you can see why we've decided it was good to be aggressive in the pace of buyback.

On your question. So, one time, nothing specific to call out this quarter. If you look at our fibered and infrastructure services revenue, we had strong growth sequentially. Now some of that is professional services and equipment, but we see that every quarter. So not being out of the ordinary. In fact, those types of non-recurring revenues were actually down on a year-over-year basis. And that tends to be lumpy. So, nothing specific to call out.

Thanks, guys.

Sure.

Our next question is from Batya Levi with UBS, please go ahead.

Great. Thank you. Maybe just to follow-up on phill's (ph.) question. Do you expect the sequential improvement that we saw when the revenue declined to continue into 4Q and into the beginning of next year? And as you look at the sales funnel, can you give us a little bit more in terms of the mix of maybe new customers versus existing and any transact you could pour into in terms of pricing. Thank you.

Yeah, I'll let Neil chime in on this to give you kind of a big picture. Look, we don't typically give revenue guidance, so I'm not going to get into detailed guidance there. But we have a tunnel that's been increasing. We like the sales that we saw in the third quarter. Nothing's ever linear, but we're executing and working hard in the fourth quarter to drive our sales, to drive our revenue growth. There is another part of your question I was going to address but --

I can tell you. So, I think on your question, on new and existing customers, keep in mind that when it comes to the large customer, we do some level of business with pretty much most companies. So, a lot of our business growth within revenue growth, I mean, within IGAM and large enterprise, comes from existing customers. We usually have a wedge product initially and then continue to grow the relationship. On the mid-market side, we do have a focus on new logos, but that environment has been for obvious reasons, it's been a little challenging. In terms of your specific to sequential improvement, I'll just underline what Jeff said. It's not going to be linear, but as Jeff highlighted, we do see the leading indicators, in addition to the mix change from the transaction. And the growth we see in the areas that we're investing. We feel confident that in 2 to 3 years we'll see the top-line influxion. You also had a question about the on pricing. We don't really -- depart pricing environment continues to be very healthy. We don't see any issues from that perspective and you can see that in our market expansion.

Got it. Thank you.

Our next question is from David Barden with the Bank of America. Please go ahead.

Hey, guys. Thanks for taking the questions. Neel and Jeff, you talked about how the portfolio will pivot more towards enterprise, obviously, and away from some of the, what you might have described as, more challenged consumer businesses. As we look at the consumer Mass Market business performance right now, how would you characterize the relative performance of the piece you're going to keep and the piece you're getting rid of from the proforma look perspective? I guess the second question is, with the coming end of CAF-2, I think you guys said even though you're cutting capex, that you expecting to spend more on the core initiatives next year. Maintaining high leverage, I just want to kind of maybe talk about the elephant in the room, which is at right now you're 5% declining revenue Company with very high leverage, cutting your capex, and after three months, telling us that you -- after reconsidering the dividend, now you're definitely going to keep paying it, and maybe even spend some more to stock buybacks. I mean, it’s a story that feels like we've seen it before and it hasn't ended well. So, I think we just need to talk about it, Jeff, and maybe just explain it. Thanks.

Sure, I'll [Indiscernible] and then [Indiscernible] a lot packed in there. Legacy consumer versus the business that we're selling versus the business that we're keeping. We don't really look at it and certainly don't give out information on it separately. But the legacy business is performing like we've seen it perform, and our team has done a really good job of managing that business for cash. And we have invested as we thought it was appropriate to continue to expand our homes past. If you look at the retained 16 states at the end of the year, we'll have something like 2.6 million fiber-enabled homes. You've seen us grow our consumer and mass-market business on a -- at the rate of, kind of 45,000 subscribers over a 100 megabits per quarter. Something like 28 to 30,000 of those on turf fiber. And so, we continue to have the parts of the business where we're investing growth and we continue to have the parts when it we're not investing, we manage those for cash. Part of the rationale behind the sale to Apollo was that they will invest more in those markets. We think there's great opportunity in them. We just weren't going to invest in them at the pace that we thought that they deserved. And we think that Apollo will do that and gave us good valuation for it. And so, it's part of our funding philosophy, is how do we fund what we want to do? Part of it is to sell assets but part of it also is to shift some of that funding obligation to somebody else. They can grow that and we don't spend the money there. Now, we have gone through it. I can go through it again, but we have lots of sources. We have significant free cash flow that we generate. And we have opportunities to continue to rationalize parts of the business that makes sense for us, and parts that don't make sense for us. But we think that we're in a very good position to do the things that sounds a little dubious about. But we think we're in a good position to do those things and we'll continue to focus on making sure that we maintain our dividend, that we invest in growth. First and foremost, that we invest in the growth that we think we can drive, and we can maintain our dividend, and we can stay relatively leveraged neutral. And I have not made any commitment to doing a share buyback -- additional share buybacks, but I do want you to know that our board is very prepared to authorize one if we thought that was appropriate. And Indraneel, I don't know if you want to add to that?

Yeah, so I'll add data I think on the mass market, we're scaling up our Fiber investment. And so, we see that as a significant opportunity. I think the mechanics are fairly well understood. And so, you're going to see us ramping that business and it's a long-life asset with predictable returns. On your comment on the 5%, you should also look at our sequential performance. We're talking about COVID last year where we had a fair amount of COVID-related demand and voice performance. So, a better number to look at it sequentially. We did decline what we declined 0.8% in IDM and [Indiscernible] enterprise grew on a sequential basis. So yeah, like I mentioned before it's not going to be linear, we are encouraged by the revenue trends we see. And the other thing to keep in mind is the capitalization of this business is rapidly changing and it's going to change rapidly going forward. Since the level to be acquisition, we picked on about $7 billion of debt. We just announced $10 billion of transaction in the quarter. We have 7%, less outstanding shares. So yeah, we will continue to transform the business and try to support the capital priorities I just laid out.

All good points. Thank you.

Our next question is from the line of Mike Rollins, with Citi. Please go ahead.

Thanks. And good afternoon. First, I was just curious if you can unpack the reason why the gross proceeds at 10.2 billion drops to about 7 billion on a net basis, on slide 5? Second, I was curious if you could just unpack if there are any costs or dilution that you had to incur to transfer the pension liabilities to another entity? And then just finally, while we're on the subject of kind of cash flow, I'm curious, if you could just talk about some of the moving pieces for 2022, that everyone should be mindful of. Whether a kind of cash tax front or the cash two fronts for any other significant moving pieces that could affect just recurring cash flow in a positive or negative way. Thanks.

So why don't I try and unpack the 10.2 to 7 billion, and then maybe, you might want to talk about cash flow for 2022. And the --so I can -- in big pictures. It's what I said in my prepared remarks. There are a lot of puts and takes, but starting with the EMBARQ debts, we're transferring $1.4 billion worth of EMBARQ debt. That's a liability that we're eliminating on the Lumen side, and transferring over. So that's actually one of the proceeds of the deal, is that we're using that to transfer that liability. Then, there are things like pension and OPEB liabilities, and there are a few $100 million, and we have taxes and deal costs. And so, we can at some point break some of those down, but those are the big picture items and it goes from $10.2 to $7.

I think, if I can add, Jeff (ph.). I think the big ones are like Jeff (ph.) said in the purchase agreement that has been filed, so feel free to look through it. So, there's $1.4 billion of EMBARQ debt. We provided debt adjustments, so that's another $100 million. Between pension and OPEB liabilities, that's another $300 million. So that's the bulk of it. So, like Jeff (ph.) said just to underline that point, that's a liability [Indiscernible] and the rest of it is basically transaction costs and taxes that we incur on the transaction. I'll keep in mind these assets are very low tax basis. If you think about, we will be using NOLs. But at the same time, we are also using NOLs for our operating income. So, it depends on. The timing of the deal. And so, it is an estimate to 7 billion is an estimate the key work there is that's discretionary cash flow that we can decide on how we support our capital priorities, whether to invest in the business, pay down debt, and we will do that as we go along. So, from a cash flow perspective. That's something to keep in mind. Also, keep in mind that we are generating strong free cash flow today. So, if you just look at our fourth quarter guidance based on our updated guidance, we'll generate strong free cash flow there, even after factoring in the dividend. So, we feel pretty good about supporting all the capital priorities that Jeff laid out. Nothing specific to highlight in terms of 2022. I think we've already talked about CAF. You need to make sure you factored in the capital reduction there as well, and then we'll have more to say when we provide next year's guidance. In terms of the pension liability transport, I won't get into the specifics, but like we said on the 8-K, it doesn't materially change our funded status.

And so, just a follow-up and I appreciate all that color. So, the $7 billion cash does not include the $1.4 billion debt reduction. So that kind of enterprise value would be the $7 plus the $1.4 for $8.4. Is that the way to think about it?

Well, the transaction value is the $10.2 though the $1.4 would be on top of the $7. So, the $7 is truly discretionary cash and the $1.4 is a debt reduction. But it's fair transfer rather than just use of discretionary cash, so you are right.

Thanks.

Our next question is from Nick Del Deo with MoffettNathanson. Please go ahead.

Hey, thanks for taking my questions. You know, first, I appreciate the new disclosures on the fiber-to-the-home front. When you point to enablement costs being $7,000 per location, should we think of that as being well below a thousand in the earlier years and increasing over time? Or should it be relatively consistent over the course of the project? And to confirm, the 12 million opportunities inclusive of the fiber locations you have today or is that incremental to them?

The 12 is it's the total. The incremental would be roughly in 10 ZIP code, so we have about 2.5 today in the retained states. In terms of a thousand, we are building at a significantly lower cost today. That's -- think of it as what we think as an average, but the reality is given the macro conditions in terms of labor cost, etc. I'm trying to give you a number, or 2, 3 years out, I don't think we -- anybody has that level of visibility, but what we are confident in is the return profile of that business because we also see a lot of opportunities in terms of continuing to increase ARPU, not only just for the base service, but all the things that we're investing in terms of the managed Wi - Fi security and other capabilities. So, we still -- irrespective of the actual cost, we think we have a really big margin of error, if you will, in terms of generating great returns.

Okay. And then can I ask 1 EBITDA [Indiscernible] question too. If I look at your implied EBITDA guidance range for Q4, the EBITDA you generate in Q3 is towards the low end, what you did in Q2 is in lower half. I know you don't give specific quarterly guidance, but is there anything we should be cognizant above that prevent EBITDA from coming in toward the lower end of the range in Q4?

Well, we haven't changed the guidance all year. So, what I would say is we do provide annual guidance and our guidance has been the same from the beginning of the year and the range is the range.

Okay. All right. Well, thank you, Neil (ph.).

Our next question is from the line of Frank Louthan with Raymond James, please go ahead.

Great. Thank you. So, if you're not intending to cut the dividend even after the Apollo deal, is there a certain point where you guys can put a line in the sand and say, at this point, we really think we can have positive sustainable top-line growth. Is that a year out, 2 years, 3 years? How should we think about that?

Well, I said earlier that with -- well, we are investing in to Quantum Fiber through our edge compute and all of other capabilities, the Lumen platform. We believe that we will end the divestiture of certain assets. We believe that we'll return to topline growth in 2 to 3 years.

Okay. Great. Thank you.

Our next question is from the line of James Ratcliffe with Evercore ISI. Please go ahead.

Thanks. Just to give a little more color on the capex front. I know it's clearly going to wrap next year as you accelerate the Quantum Fiber build-out. But in terms of the -- and you gave some commentary in the quarter of what it will -- the decline, but what's sort of ROI s are you getting on this lower capital level? Are they for higher or similar? And absent the Quantum Fiber ramp, how should we be thinking about the capital intensity of essentially the business side of the business going forward? Thanks.

So, on capital, first thing to keep in mind is, we are leveraging a fairly large investment in terms of the infrastructure that we have, and so we're focusing a lot on net buildings. Part of that is the current environment but as the economy continues to reopen and Enterprise start investing in new locations, we will also ramp up, adding new locations. In terms of ROI s, we continue to see very good ROI s on the investment that we make on the Enterprise side and I think the consumer most [Indiscernible] dollar with the dynamics there. So that's -- ROI is not an issue for us. It is really managing the legacy revenues for cash that really mutes the returns, if you will, from our perspective. In addition to that, we continue to focus on capital efficiency initiatives. So, we continue to focus on how we get more efficiency in terms of our processes, how we deploy capital, unit cost of capacities. So those things continue to be areas of focus for us.

Just to augment Neel's answer. Looking at us from the outside, you probably discount that Capital efficiency. Looking at us from the inside, we do not discount that. That's real -- those are real numbers that we see benefit from. And if you look at what we've been investing in on the enterprise side, it's been pretty significant. We first of all, invested and making sure that our cost structure is appropriate, that we can deliver a level of service with a lower-cost every year to deliver that and make sure that we're improving our service quality. We've done that. We continue to invest in edge computing and edge storage. We think those are great opportunities for us that we gave you. at the beginning of the year. We said we'd have 95% of the U.S. within 5 milliseconds of our edge facilities by the end of the year. We finished that somewhere at the end of the second quarter, beginning of the third quarter, we actually over exceeded in the coverage. And in the timeframe, we were much faster. And then in the cost to deliver. And so, we are very careful with our investments. We've augmented our adaptive networking, our connected security. We're working on a unified communications and collaborations capabilities. We're continuing to augment our platform and our services, and we see success in the market with us. Now all that's in addition to Quantum Fiber, which we intend to ramp as I've already talked about a couple of times. Thanks for the question, James.

Thank you.

France (ph.), we have time for just one more question.

Very good. Our last question then will be from the line of Jonathan Chaplin with New Street Research, please go ahead.

Hey guys. Thanks so much for squeezing me in. So, I just wanted to follow up on the consumer business over the -- if we think of 2019 as sort of a baseline year, it looks like the pace of net adds in the fiber business and even in the non-fiber business on the consumer side has slowed quite a lot. And on the fiber business, that's despite increasing your addressable footprint. I'm wondering if you could just talk to the what you're seeing in the market in broadband, what might be sort of creating headwinds for growth there. And the reason I ask is we're on record of saying if you can -- for the $10 billion into deploying fiber, it creates an incredible amount of value for you, but obviously it's a 6 to 7-year process. You're asking investors to look many years ahead before we'll see cash flow falling through from this project in a material way. And so, sort of gaining confidence in your ability to drive penetration into those markets, I think is really key to getting an appropriate multiple for what you're building here. And then second question is, if I may, Jeff, you sort of -- you have conviction that the stock is worth a lot more than what it's trading at the moment. And that was reflected in the share repurchase that you guys did in the third quarter. Why not funnel all the cash that you're paying in dividends and to share repurchase if it's that undervalued? You obviously not getting credit for the dividend based on the yields. So why not just put it all into share repurchases? Thanks.

So, let me take the first question. I'll let Neil go through some of the detailed answers and then I'll come back with the stock price conviction and what we're doing there. If you -- embedded in your question about consumer is kind of well, do you believe that the $10 billion is a good use of investment? Will you agree with that? Do you agree with that? That's going to go a little bit into why not use stock repurchases because we believe they are investments that are good for shareholders. But then you also kind of introduced the notion of -- we have got to prove it that it's good, and that's exactly what we've been doing over the last couple of years. We know that -- the building fibers not the hardest thing in the world. We can build fiber. We can build fiber to a bunch of locations, but then how do you deliver the service to customers? And so, we've been working on our best in the business capabilities, our Quantum Fiber capabilities, to turn up customers with low-tech, with a digital experience in the way that they want to have the experience, to be able to layer other capabilities on top of that. And then we wanted to prove to ourselves, as we moved away from investing in bonding and vectoring and things you have not heard us talk about for several years because we stopped doing them. As we put all of our focus on Fiber, we wanted to prove that we can get to the penetration rates that we expect. And we can, and we have, and we gave you some insights into thinking that should be 40 plus percent penetration in places where we have been marketing for periods of time.…

I think, yeah, you covered most of it. I think your question on the fundamental thesis, in terms of the market and the opportunity and the symmetrical nature of fiber and how it's resonating with customers. All of that we see and we're leaning in. Our fiber net adds were a little softer this quarter than we would like and that is primarily driven by the fact that we are able to improve a major pivot internally in terms of how we go to market. So, like Jeff mentioned, we wanted to prove this out first. So, we had a micro-targeting strategy and we've proven it out. We've seen how it resonates with customer. We've invested in our processes and capabilities, and now we're doing the pivot to go to a more market-based approach. And that takes a little bit of time to get our organization, our size to scale up to a new ecosystem. And so yeah, we feel very confident that opportunity is something we see us creating a fair amount of value. And we're not constraining it like Jeff said in terms of the priorities, there's a reason why number 1 is invested revenue, and that's something we will prioritize.

So, thank you, Jonathan, for the question. And as you heard in our answers, Jonathan's questions, and all of your questions today, we have a lot of optimism and excitement here at Lumen as we're growing markets, investing for growth through Quantum Fiber, to continue to enhance our already powerful enterprise platform and capabilities. We continue to return cash to shareholders. We're bullish on our future and excited for the ongoing transformational work that lies ahead. So, I want to thank all of you for joining today's call and as always, the interest in Lumen. Thank you all.

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