Lumen Technologies, Inc. (LUMN) Earnings Call Transcript & Summary

Well, thanks, and good morning. Welcome back to Citi's Global TMT West Conference. For those of you I haven't had an opportunity to meet in person, I'm Mike Rollins and I cover the communication services, infrastructure sectors for Citi Research. Just for your reference, we do have disclosures available on the conference registration site. I'd like to welcome Ed Morche, President of Lumen's North American Enterprise and Public Sector Group. Ed, Happy New Year. Good morning, and thanks for joining us today.

Thanks, Mike. Really appreciate the invitation. Looking forward to spend some time together, and Happy New Year to you.

Thanks. Well, to get us started, can you share with us Lumen's key strategic and operating priorities for the businesses and services and products and sales teams that you lead?

Sure. First, not surprisingly, is a constant improvement on our customer experience. And that's really the external customer and our internal customer, making life easier in terms of ordering, operating and interacting with us. So it's a digital-first strategy. So making sure that our products and capabilities are completely digitally enabled so that our customers externally can choose when and how they interact with us. They're not reliant on human interaction. We're here for them if they want us to be. But for those customers who are more independent or want to work different hours or just want to be on their own, ensuring that they can do that in a very seamless way. And then internally, that allows for a lot of bureaucracy and OpEx to move out of the organization into more creative roles. So as part of that, you may have seen in the last couple of months last year, we rolled out a handful of products on this new platform. I'll talk a lot about platform today, but Hyper WAN, which allows customers to go online and order hybrid networking, so MPLS and SD-WAN at the same time with security completely on their own in a flow-through environment and also Hyper DDoS. So you've seen all the DDoS attacks that enterprises have gone under, especially the second half of last year. We can do that for people, interact with our stocking, and we'll set up the connectivity for you or you can go online completely on your own and set up that protection by yourself. And you can do that in minutes. That's been very successful for us. And then dynamic capacity where customers can go online, interact with us, take down capacity across the country, turn it up and turn it down. That will reserve it for the future, schedule how much capacity they have and when they have to have it, not having to go through a sales team to do that. And then what we'll see coming from us in beta in the next couple of weeks is a wave topology tool, which I'm really excited about. So we operate, I would say, the largest network in the world. What I'll say here, it's one of the largest networks in the world. And wavelength is a huge part of what we provide to our customer set. So they might interact with us looking to provide their own diversity. If they already have a route from somebody else, they want to purchase diversity from us. And normally, they would interact with a sales team and a sales engineer. There'll be a lot of collaboration back and forth or then they want to build an entire diverse wavelength backbone on their own. So we have opened up the fabric of our network. So our customers can see all the points that they can set up wavelengths, all the different routes between those points and where we have capacity. It's kind of -- we kind of joke internally, it's like the F-150 tool, if you ever go to fordtruck.com. Any kind of vehicle that you want to configure, you can play with, and people usually walk away. But if you play with it and design something that you like, electronically, that flows to our sales engineering team. They validate the design; if there are any concerns, interact with the customer. And if the customer says, "Yes, that's what I want," we authorize that and it flows through into delivery and into assurance. So that tool from the very beginning of customer interaction, collaborating with us, using our network but not necessarily our people flows all the way through as an as-built at the very end. And if a customer asked for diversity, and for some reason that diversity was lost next month, a year from now or 2 years from now, we automatically create trouble tickets against that. We start working at -- to fix it, and we notify the customer that we're already on it. And so that automatic auditing of capability, that intelligent networking, that unearthing of capability on the network is so important to improving customer experience. So that's really the first thing that we're focused on. Second, it's really about investing in the business while we maintain and grow our EBITDA position. And so we've done a really good job of creating cost synergies, pulling costs out of the business. We have a very healthy EBITDA and free cash flow. But thirdly, top line revenue growth is very important to us as well. And you've seen parts of the business return to top line growth. So internally, the business I run, the Enterprise business is referred to as Enterprise externally as well. Out of the last 5 quarters, we've grown 4 of the 5 quarter-over-quarter. And that's the washing out of some of the legacy business, transitioning to newer services. And we're seeing that business continue to grow fairly steadily. Portions of our IGAM business are doing the same thing. And also want to call out our Quantum Fiber business in the consumer organization. We added 46,000 gig customers last quarter alone. So we're seeing really good pockets of growth. And it's going to happen piece by piece as we continue to drive the business forward and invest more. So that's kind of on the operating side. On the strategic side, it's really all about Lumen edge, and we'll talk more about that as we go. If you think about -- the combination of nearly all the next-gen networks in North America belong to Lumen. There's a couple that don't, but most of them do. So we have a great breadth of assets. We also ended up owning a lot of real estate. So if you think about the gateways that Level 3 had, the [ ILAs ] that Qwest had, the central offices that CenturyTel had, a lot of that space we have reconditioned. It's not necessarily the pretty space that you might see from a data center provider in Ashburn that looks a bit like a high-end car showroom to impress customers. It's more bunkered, conditioned facilities, and we don't expect customers to ever go to them. But we've taken out the equipment in many of these. We've reconditioned them. They already have diversity of fiber and condition power. Putting in our edge platform, we can hit 98% of U.S. enterprises in North America within 5 milliseconds or less. And that is the big focus for us is continuing to invest in the classic infrastructure that we have, going to buildings, fiber point-to-point, other capabilities, but also ensuring that we don't just bring buildings on that. We bring communities on that by putting an edge node in Arlington, Virginia where I am or in Framingham, Massachusetts anywhere across the country. And we see, because of COVID, that increased need to work from anywhere. We're probably not going to go back to the way things used to be. Maybe we'll go somewhere in the middle. But if you look at the outflow of people from expensive markets, high-tax markets like New York state going to lower-tax areas, the secondary cities and states or tertiary cities and states, we can hit them wherever they go as opposed to a classic data center provider with built out series of data centers in Ashburn or Chicago. When those customers leave those expensive markets, you have to then go find land, get permits, go build a building that takes years to go and do. We'll have the majority of this built out, the 100-plus nodes, by middle of this year.

It gives us a lot to talk about. Why don't I get our audience involved in the conversation with our live survey. So we're going to put up our first question. We're not going to go to it right away. We'll give time for people to respond. And just for our audience's peace of mind, your responses are anonymous, just aggregating the percentages and just trying to understand what the collective audience believes. And so curious to ask a question about the economy. So we'll go to the first survey question. And just so you know what the question is that we're asking is for the current year, we will likely see higher nonfarm employment levels, flat nonfarm employment levels or lower nonfarm employment levels? And just given all of the questions of GDP and given the focus on the enterprise category, we thought the focus on nonfarm employment might be just the most helpful barometer to survey. So we pushed that out there. But before we get to that, Ed, you mentioned that there was this translation of how you call revenues Enterprise internally to what's externally reported. And maybe just to help our audience, can you frame the totality of the revenue that you and your team are responsible for within Lumen?

Sure, Mike. It's about 30% of total revenue. And if you go back over the last 8 quarters, you see that, that percentage is growing, in part because the business is growing. Also, if we look at Consumer as an example and Wholesale, they're going to decline over time. So it's becoming a bigger and bigger part of what we do. And the organization that I run, as you said, consists of the Enterprise teams and the public sector teams. Enterprise, think about mid-markets, all the way up to our largest customers. And on the public sector side, it's federal. So it's the DOD, civilian, intelligence community and all of SLED, state, local education, inclusive of the research and education vertical. That's really been a very close focus for ours over the last 1.5 decades or so.

Great. And just another question just in terms of Lumen's recent developments. One notable development has been the rebranding that the company has done. And there's been a little bit of restructuring in terms of where in the aggregate organization things are now sitting. So can you describe how that realignment process has been and the reaction that you're getting from your customers?

Yes. The realignment has been fine. I think in -- when I came from the acquired Level 3 side, I think that was my 16th integration. So many of us are used to going through some heavy-lift activity. This wasn't anywhere near as heavy as that. But we're good at program management and rolling out large institutional change. Internally, it's gone fine. Externally, all of us reached out to CIOs, COOs, CEOs that we're close to, so that I want to give you a heads up of what's going to happen. I don't want you be surprised. Yes. And from my personal perspective, every single conversation was overwhelmingly positive. And it was because the people that are reliant upon us recognize that the prior name really didn't identify with who we were today and what we are doing. And we've consciously spent the last 3 years since close of the last acquisition ensuring that we were evolving into a technology company. And if you look at what a telecommunications company does, you're providing raw infrastructure to somebody who then adds value to it. And most of our customers see us today as someone who provides all of that plus higher-level services, applications on a platform and a lot of the enablement capabilities that our competitors don't. So we refer to those as professional services, meaning onetime activities, where we go install or do the arms and legs work for you; and then managed services, which are the ongoing maintenance activities of running a network of, running your outsourced IT. And that has become a bigger part of our discussions over time. Infrastructure is a huge part of what we do. But if you look at the pressure that our customers are under before COVID and accelerated by COVID, their budgets on OpEx have really been pushed hard. So they've lost a lot of people who would do the physical work of running and maintaining a network. Sometimes they've come and we've hired them on our side. And what you end up with is a customer base that needs someone to outsource their IT activity to, their network operations to, the security operations to, and that infrastructure pulls through with it. And we have been doing that very well. So when I reached out to these customers and talk to them, they said, "Great. Totally understand why you're changing the name. It makes sense because the prior name didn't jive with who you are today."

Mentioned the pandemic, and curious if you can give us an update in terms of how the pandemic's impacting Lumen, whether it's with respect to how you're managing in this environment, but also how your customers are responding and what you're seeing in terms of demand from your customers.

It's different by vertical, Mike, depending on where you were in the phase. Health care has always been -- health care and big pharma have been the big drivers of activity for obvious reasons. As COVID has spiked up and spiked down, there's been various requests from health care systems for us to support them. And I'm glad to say that people recognize who you really are when things are tough. It's easy to be magnanimous when times are great. I had a conversation in middle of the summer with a CIO from a large health care organization. He said, "I really need your help. We've got demand in certain states and less demand in other states. And I need to be able to turn up bandwidth over here, shut down facilities over there, but I'm going to end up owing you a lot of money." We said, "That's not what we're worried about. We're worried about making sure that we can keep people safe, that we can support you." And that over time, that's a good investment in our relationship, and that's just the right thing to do. And his response was, "Great. You guys are not my primary provider, but you will be because the primary provider is holding the hostage on ETLs, other things on a contract." And so this -- no one anticipated this would ever happen. And so we had a lot of those discussions during the course of the year. That certainly wasn't the only one. So our customers have been reacting wildly to what's been happening to them. There've been a lot of requests for assistance. And what I've been really proud to see is you think about large retail organizations who are under enormous pressure and asking us for longer time to pay their bill for relief on certain things. I had a call with a CIO of a large retail clothing company. We worked out a reasonable concession, and part of it was a contractual need to add certain number of stores per month and said, "No, we're going to waive that." And in terms of payment, they'd ask for some additional months. We negotiated that. He came back to me and said, "Our CFO overrode our negotiation. You're considered our most critical provider. And so all the money we have available, we'll pay you first and then will trickle down to the other partners." And that happened over and over and over again, the recognition of how critical a relationship was between us and our customers that we were their lifeline for keeping their businesses operating. We certainly didn't start conversations that way, but we did end conversations that way. And I'm pleased to say that the relationships that we have with our customers are even stronger because of COVID and how we've worked to support them. And that will pay dividends for us next year and the year after. I mean we can see things starting to get better, hopefully by midyear. I know we've got -- the vaccine is widely distributed. We've got stimulus out to small business and midsized business. We start to see that becoming healthier. And then internally, I couldn't be prouder of our company. Our folks have worked far longer hours than they've ever worked before. They really don't know how to stop working because you wake up in the morning and you're on e-mail, your traditional activities of hopping in the car or getting on a subway are gone. So you're just working all morning and all day and all night, especially in the beginning, the number of emergency bandwidth upgrades that we did for customers, where we pushed all process aside and we turned up connectivity in minutes or hours sometimes that used to take weeks or months just to make sure that we could keep our customers up and alive and doing what they need to make sure they were supporting the folks that rely on them. So it's been a humbling experience. It's been a positive experience. I mean it's been, one, really tough year, and none of us ever want to go through it again. But there are positives that come out of it. And seeing how people rally together to support each other, not just because they want to grow revenue but because they want to ensure that they're helping out people in their community, that they're doing the right things for organizations, and ultimately, that helps us.

Let's bring in the survey results and see what our audience thinks about the economy, and then you and I can talk about that for a few moments. So 57% expects higher nonfarm employment, 29% lower and 14% flat. So as you think about what the economy may do in 2021, how influential is that to your results? And have there been any learnings as parts of the country have been going through a second wave of the pandemic?

Yes. So first, I would agree with the survey results, the 57% group. I think the consensus is around 4%, 5% GDP growth in '21. You can see that we'll get through the transition here in administrations. Stimulus checks will start going out. That will certainly help the most affected, small and midsized businesses. And in turn, we expect them to start hiring against all of that jobs and makes sense. That will certainly be helpful for us. We rode the storm in 2020 fairly well. We didn't see a big impact to churn. We expected harsher impacts. But again, we were more of a lifeline For those companies that were able to stay in business. They prioritized working with us. So I think that there's only upside in what's happening with infrastructure investment, probably more government spending and stimulus. So I think that, that's all positive for us. And then on the global side, I think that the GDP consensus is around 6%. So even better there, where we see some of our offshore customers that we have in Asia Pac, EMEA, Latin America grow even faster, hopefully.

And does the health of the economy, job growth, GDP growth, do you look at that as a significant influence for how your customers spend on communications? Or is just the necessity of broadband and technology, IT infrastructure starting to separate these 2 from one another?

It's a great question, Mike. We can see a scenario to grow in either environment because when you have to contract in a recession or some other economic downturn, you really can't walk away from your infrastructure and your connectivity. You're wholly reliant on that. But you do end up in a lot of conversations of how can I keep what I have but spend less on it, and those are not accretive discussions. You have to work through things with your customer, depending on what their economic pressures are and certainly rather be in a growth environment, a much better place for us to be. And if you're in that growth environment and what we just talked about happens and we see nonfarm payrolls increase, that means more investment. Whether it's traditional dedicated networking, bricks-and-mortar, that's a good thing for us. We have plenty of fiber in the ground and plenty of -- 170,000-or-so buildings on that and hundreds of thousands near net that's great for us; or if it's on more of an over-the-top environment using our edge platform, I think we're hedged for positive no matter what happens.

Let's -- one of the things that we like to do is just poll our audience on what they think the growth profile will look like for Lumen or previously CenturyLink. And we thought we'd make this a little easier and take the residential business out of the equation. So we'll pull up the second survey. And we're going to ask our audience, what's your expectation for organic revenue growth for Lumen revenue excluding residential in 2021? And so that would include, of course, all the revenue that Ed is responsible for as well as SMB and wholesale. And so the choices are a decline of greater than 2%, between negative 2% and 0, between 0 and plus 2% or growth of more than -- and plus 2%. And we'll come back and see what our audience thinks about that in a moment. Is there a way for you to size -- for the customers that you're responsible for, is there a way to size the market to say, okay, here's the total addressable revenue that Lumen can go after and here's your share of that today, so our audience could appreciate the opportunities for you to improve your share over time?

It's a very -- I understand why you're asking it, Mike. It's a very subjective response depending on where you sit. So I might come up with a very conservative number to make sure that I'm overpromising. But if you look at the Enterprise business stand-alone, probably we're lower double digits, so in the teens. And if you look at Enterprise with public sector added into it, because of the size of government spend, especially on the state and local side, we're in the low to mid-single digits. So we have ample opportunity to grow. I'm not worried about there being lack of market opportunity. I'm not worried about us being too big. We're certainly nowhere near 30% or something like that, that would hamper our growth. Plenty of room to grow. The other thing that's in our favor is our denominator's increasing. As we add more services and capabilities, the addressable continues to grow. So as -- if we had this conversation 3 years ago, we wouldn't have included IT services. We wouldn't have included any of our edge compute capabilities. And so it just continues to grow and grow and grow. So plenty of opportunity for us. I don't think that's our constraint.

Let's see what our audience thinks of just overall growth from an ex residential. [Voting]

Okay. Here we go. So it's split: 45% minus 2% to 0, 45% 0 to plus 2%, 9% decline of greater than minus 2%. So when you think about the growth drivers for the business, do you think the pandemic, the remote work environment, will this accelerate enterprise firms to think about re-architecting themselves? And that potentially faster pace of decision-making, is that an opportunity for Lumen to bend the curve in your favor?

Yes. I like the way you framed that, Mike. The biggest issue that we have right now is stagnation in decision-making. So the funnel has been strong for the last 12 months. The challenge has been the lack of understanding by our customers what their environment is going to look like in the future. Which sites am I going to shut down? Which sites am I going to maintain? Which sites will I consolidate into a smaller footprint? And so some have figured that out over time. Some are still waiting. As the pandemic begins to subside, I expect that stagnation to decrease substantially. So that's certainly an upside opportunity for us. We talked about the hybrid opportunity going forward. It's not going to be like it is today. It won't be like it was last year either or the year before. We'll have some people working from anywhere or working from home, and we'll have some people working in the office. The working-in-the-office piece, easy, we have that taken care. And because of the infrastructure investment -- but the infrastructure investment also supports the Lumen edge compute that we're rolling out. So whether it's me working from my home in Arlington, you working from, say, Massachusetts, wherever you might be, we can service you. And that the challenge in technology right now, we all rely on certain applications. There are certain applications that work for everybody, say, a Zoom. There are certain applications that apply just to hospital systems and medical care, so like Epic health systems. There's some of the private accounting companies, et cetera, and they're becoming more and more dependent on those -- in a distributed hybrid workforce, having homogenous performance is the most important thing. So -- and performance for us is measured in latency. And as we talked to CIOs over the last 2 years, we said, "Okay. If you've moved out 25% of your workloads into the cloud, AWS or Azure, wherever you put them, Google, what's preventing the last 75% from moving?" And it's all performance, and performance is latency. And we said, "Well, what's the cut line?" And the cut line was 5 milliseconds or less and I can move everything because that's where human perception can no longer -- you can't see the difference. And if a CIO can keep his internal constituents happy, not knocking on his or her door saying, "My app doesn't work," then he's having a good day or she's having a good day. It's a bet opportunity for us to outsource the remaining 75%. If you look at IDC or Gartner, we're about -- edge compute was about $4.5 billion, $4.6 billion opportunity this year, growing over the next 2 to 3 years to a $10 billion to $40 billion opportunity. And there are others that have even higher numbers than that. That's all market that we didn't have access to before. We're creating a new market.

I want to continue this conversation on the edge, but I also want to bring in our audience for another survey question that we'll do in a few minutes. So on this one, the question is, what is the greatest risk to performance the enterprise and government verticals for Lumen? And we gave choices of ongoing legacy revenue declines; competition; new technology such as software-defined networking cannibalizing the existing services; and alternatively, share gain opportunities for Lumen exceed these risks on a 5-year basis. So we'll come back to that in a moment. Our audience answers that. Thinking about the edge, the edge has been a conversation now, and it's been growing in volume over the last number of months. Whether it's from the tower companies, the data center companies, fiber infrastructure firms, you're talking about the edge. So what is it about the edge platform that Lumen's building that's differentiated from the other parts of these ecosystems? And do you see your opportunity as independent of what these others are doing? Is it competitive? Or is it maybe complementary to what everyone knows now talking about in terms of micro edge and far edge and getting infrastructure closer to the eyeballs and the users?

Yes. There's a lot to unpack there, Mike. I mean we could probably talk for an hour just on that. But edge itself is really just a way to contain and allow someone to retrieve data. That's all it is. Now that could be in an application, that can be in a private environment or a public environment, but it comes back to that performance discussion. And so how do you make that perform? We have to get it close to the people that need it. So that means you have to have a very large network to be able to cover 330 million people or as close as you can get to that. And then you've got to make sure that you push it as close to them as possible. So you have to have physical containers, something to put the data in. And then you have to have the ability to interact with other networks. We're the most peered network in the world. So we hit more [ AS ] than anybody else in the world. Nobody has that single hot performance that we have. Now if you wanted to go out and build all that fiber yourself, if you want to go out and acquire all that real estate yourself and condition it and you wanted to go develop all that peering, yes, I think it's possible. It's probably in the hundreds of billions of dollars that you would have to spend to do that. And it would probably take you 5 years, 10 years to go and do it. So it's not really practical for someone to go and mimic what we have. And we backed into this through M&A over the years. We created this value. But we've always been the middle of the Internet. We've always been the largest transit provider worldwide. And so it's a unique capability that we have that we feel no one else has. So some of it is competitive. We have the ability to go out and compete against data center providers, to your point, that want to go and get into this business and transition from basically being a cross-connect provider in a glamorous data center. There are others where it's going to be highly cooperative. So look at AWS and Google and Azure, there's a great opportunity for us to be the infill provider in the secondary and tertiary markets and work in a highly cooperative manner with them to help them have ubiquity of coverage, but it's also the ability for us to do it stand-alone where we see the need. But I think one of the biggest opportunities is going to be as we move applications, the one we've talked about for health care for manufacturing, what have you, onto this edge environment, the role that we will play, the job that we will have is to allow someone else's application, and that's what they do best, to allow someone else's application to perform even better. That's our job, period. And if all we do is that, I think there's enormous opportunity for us.

As you may appreciate, our audience likes numbers. Are there some additional numbers or metrics you can share in terms of the vastness of the fiber network that Lumen has today?

Sure. We've got about 4 -- 250,000 fiber route miles worldwide that we own and operate. We're in over 100 countries with our own network and capability. Now we're in, I think, a little more than 2,200 data centers, some that we own, some third party. And like I said, we are the most connected, most peered network in the world. So we tend to live in numbers' world. Many of us in the Lumen side are engineers. That's just background. That's my background. It's Neel's background. The numbers are great. I think we have everything we need. And I think that's -- one of the questions and it goes, "Do you have enough?" We've built an enormous network. We'll always be adding to it. We'll always be trying to make rings smaller. We're always be trying to decrease latency. We'll always be upgrading equipment as we find better answers from partners that we work with. But we have the raw assets that we need, and we have the raw assets that create what we believe is the best edge platform in the world. It's just a matter of execution. And what I'm really proud of from the executive management team, all the way to the folks that do the work in the field, is that this was a discussion in Q1 that we turned into a business case that we approved that we then accelerated dramatically from years down to quarters. And we'll have it primarily complete by the middle of this year. So we're inside a very large 85-year-old company more acting as a start-up. And that's a very purposeful activity. And we make sure that a certain group of people do only that one thing rather than trying to distract them. And you could. Just given the size of the company and the number of products that we have across enterprise globally and the consumer, you could have people work on just one update of every product every single year. And they would do that, but you just wouldn't see the net effect of it on your numbers. So this is a true focal point for us.

Let's see what our audience thinks. Wish we had a drumroll for some of these. [Voting]

Yes.

Okay. 56%, new technology, SDNs, cannibalizing existing services; and 44% concerned about legacy revenue declines; and 0 for competition; and 0 in terms of the share gain opportunities to exceed the opportunity. So I'm curious, as you look at these results, what are your thoughts just on the overall perception from our audience? And maybe we'll delve into each of these for a minute or 2.

Yes. I mean I can't speak to the specific numbers, obviously. If you think about the concerns of cannibalization, sure, we're all concerned with it. We were concerned with it 20 years ago, when it was ATM and Frame rolling over to MPLS. And that's kind of the nature of telecommunications in general and technology. So I think this is the next big shift. But it's also -- it's not just going from VPN and MPLS over to SD-WAN because you're really just trading out in the current environment dedicated networking for public networking. You're still relying on a vendor to provide you with CPE. Whether it's in the carrier cloud or whether it's in your facility, it's still a hardware-based answer. The real magic here is if you can convert that CPE to an app or applet that you can put out at the edge and divorce yourself from having to be an operator of equipment but just use somebody else's deployment. That's going to be a major shift out there, where applications move out to the edge, CPE becomes an app and moves to the edge. And going from dedicated networking to public networking is -- it depends on what performance you want. And that is what's going to continue to drive demand for us. Broadband is fine. If you want to use broadband to connect to our service, that's fine. We're the most peered network. You'll get the best third-party performance connecting into us than anybody else. If you want even better performance, you can buy that broadband and fiber plus from us, coming into our public side of our IP network. And if you want even better, you can buy a dedicated private interconnection, DIA, waves, Ethernet coming into the private side of our network. That will become the discussion over time. I think this is the -- this big shift we're going through right now from VPN and SD-WAN will quickly become a software discussion, not an infrastructure discussion. And then access will become a performance discussion. Tell me what you want. And for some people, it's not going to be a unified answer. It's not going to be broadband at every facility, maybe for gas stations or things, for convenience stores. But for financial services, for any large organization, there'll be places that demand dedicated networking because of the certainty of it, the performance of it, the security around it. If you look at big pharma, you can't imagine that you're going to have a lot of your R&E or R&D facilities connect on the public Internet because of concerns over loss of intellectual property. So you're always going to have fiber-based dedicated solutions out there. But for individual like you and me working from home, it might be fine to come over third-party broadband. And we're okay with that.

And as you think about the competitive landscape, has there been a significant shift in the competition, maybe better, maybe tougher?

There's been a lot of consolidation. If you look on the enterprise side, so for the normal infrastructure buying, it's on a national scale, there's really just 3 of us, especially if there are global components. I could get down to the regional SMB, then it's a little bit -- it's us and the cable companies kind of going head to head. And that's fine. It's -- our discussion then is we talk to customers or we appeal to customers who need performance. If it's purely a cost position where -- if we can compete, we will, but we're not going to do anything that's unnatural financially for us. And we've always had that at the forefront of our thoughts and discussions. We don't buy business. We only go after healthy business. I think that shows in our EBITDA and our free cash flow numbers. We could grow top line tomorrow at very low margin, but that's not a good business. And so we've always been focused on growing a positive good business. And those folks who've gone out, smaller companies who try to buy top line, they go away over time. They get gobbled up or they cease to operate successfully. On the government side, it's a different answer for state and NG911 and on the federal side. On the federal side, there are really 9 providers on the largest contracts that were on EIS. It's really just 3 of us that take the most of the share. Our share continues to grow and it has. I started running the government team in 2007. We're 100x the size that we were back then. So that's gone very well. The more government spending there is, the more we benefit from that. If you look at kind of stack ranking of federal contractors for IT services and communication services, we're #29. So we have a long way to go in terms of taking and growing additional share. So I'm fine with the competition we have. We'll always have it. We don't really need to consolidate anything else. We have the network that we need and the capabilities we need. There'll probably always be some niche things that we're looking to go and do. And perhaps, it's faster to bring somebody into the fold than to do it ourselves. But the competitive environment is good the way it is, and we make sure we compete where we know we can win.

And so just thinking at a high level, given everything that we've talked about, if you consider where strategic versus legacy revenues are, where the competitive landscape is, the specific actions your group is taking to work with your customers and improve your wallet share, are you at the point now where the revenue that you're responsible for is in a much better position to keep growing in the future? Or are we still in an environment where in any given period, if there's an acceleration of legacy transition or a reconfiguration of the way people work in offices or in their homes or on the road that there could still be these bumps along the way before you get to a point where you're in a better positioned for sustainable growth?

Yes. I'd just get back, Mike, to the comment I made a little while ago. If you look at the business that I run, it's grown quarter-over-quarter 4 over the last 5 quarters. So that's pretty consistent. You see more consistency in more recent times than in prior times. And there's a lot of work to do when the 2 companies came together in terms of washing out business that you knew you're going to lose or have you replaced or the prior folks hadn't paid enough attention to. I'm very happy with the way we have the team constructed from a sales and acquisition perspective as well as a customer for success and revenue maintenance perspective. We've got more investment in terms of people and accounts than our competitors do. And that shows. When I talk to our customers and interact with them, our competition is pulling away direct resources, moving into other things, wireless, content, et cetera, moving those customers into call centers. And they're not comfortable with that. And we continue to invest more on the operating side with our customers. We've seen relatively low impact in churn during COVID. By all rights, we should have seen much, much worse than what we saw. I think that's because of the way we surround our customers, the way we support our customers. And I think it's going to put us in a really good position to grow in the future.

And you mentioned wireless and some of the competitors in the business arena are talking about the importance of wireless in bundles, in the selling process. Can you unpack a little bit more of the role wireless plays or doesn't play for the opportunities that you're pursuing with your customers?

Wireless is an access methodology. And that's the way we talk to our customers about it. We provide that. If that's something that they need, we can build a private 5G network, and we have. We use 5G in our own Consumer division. It's not a big talk track for us because 5G right now doesn't truly exist. And if you remember the rollout from 3G to 4G, to get fully duplex 4G took 3 to 5 years. So you'll see simplex 5G in the big markets. You won't see fully duplex 5G for years to come, and you won't see it in the secondary and tertiary markets. So if it's something that our customers need, we can provide it. On the enterprise side, we partnered with other providers to go and do that and on the government side as well. It's really just about access. And for most of our customers, that would be something that they would look to use in a very small office. And then it's a discussion around, well, is broadband the right option there or is it 5G? For the most part, we would opt to a broadband solution.

And in our last couple of minutes, as you've had opportunities to speak with investors, are there anything -- any other items or anything else that you feel is underappreciated that you want to illuminate for our audience today?

I think it's hard for analysts, for third parties to see the speed at which we're moving internally. If you look at what we have done from the close of the Level 3 acquisition until now, there's been a huge change in the company in terms of culture, in terms of focus on the customer, simplification, digitization and allowing our customers to interact with our network and our capabilities without necessarily having to interact with us unless they choose to. And I think that will become more apparent through the course of 2021 as well as the investments in edge and the additional market opportunities that can bring us. But I think it just actually takes time for a third-party to see what we're doing. They want to see the results. Results take a couple of quarters to prove. And we've really been driving this hard in terms of results in 2020 amidst all the other negatives that were impacting us and everybody else in our world coming from COVID. And I'm highly confident in the second half of this year, we'll see some really positive trends coming out as well as product capabilities and releases. And so I'm very proud of what we've done. These are things that analysts will just start to see in '21.

Ed, thanks for sharing your time with us today.

It's my pleasure, Mike. Really enjoyed it.

Thank you, and thanks for our audience.