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

Hi, everyone. Welcome to UBS Global TMT Conference. I'm Batya Levi, Communications Services and Infrastructure Analyst at UBS. I'm happy to announce our next presenter, Shaun Andrews, Chief Marketing Officer of Lumen. Thanks so much for joining us.

Thank you for having me, Batya. Good to see you.

Good to see you.

So I thought that we would start off similar to every year with -- maybe if you could talk about some of the surprises of '21 and what your priorities are as we head into '22?

Yes. So surprises of 2021. We were continually -- maybe surprised isn't the right word, but we continued to see the COVID accelerated things rather than changed things, right? So if you can think back to when it hit, like we were all like, oh, is COVID going to change everything? And we thought, oh, maybe it's not. It's accelerating. We continued to see that focused acceleration. So that was comforting, and that was something that we didn't know for sure whether it was going to come that way and it did. So a real focus on digital transformation, unified communications, cloud, security, UCC, all of the digital experience. We saw that. The other part that we didn't necessarily know that probably surprised me a little bit was the narrative of our customers. If you think about when we left Q4 of 2021, CIO -- like if I met with the CIO and she was running a health care system in Phoenix, she was obsessed with work from anywhere and worked from home and where everyone was going to be, and you could feel them stymied by that -- like indecision, and there -- it was like the tail wagging the dog. As we went through 2021, I was pleasantly surprised to see that narrative go away. And now when I meet with CIO, she's going to talk about her business problems, employee retention, growth, supply side challenges and how all of those manifest themselves into conversations about applications and data. So I'm pleasantly surprised, we're on the other side of that narrative and that's manifested itself into customers being more decisive. So I didn't know when it was going to happen, but it happened around that kind of February, March time frame. We started the CIOs close out on decisions and make decisions, and that's when we saw the sales progress start to build through Q2 and Q3. And that's got us in a place now where the funnel is actually bigger than it was prepandemic. So I guess I'm somewhat surprised or happy that the funnel is larger than it was prepandemic at this point in the year. Focus is definitely on investing for growth, investing for growth, investing for growth. And that comes in the form of investing in the Lumen platform, edge computing, unified communications, wrapping it with cybersecurity, managed services, and then the Quantum Fiber build that Jeff mentioned in our last earnings call, and the doubling down there. That's where most of the investment and the focus is in those two conversations.

Okay. That's a great overview. Let's dig in into each segment and maybe starting with Enterprise. Can you talk about maybe what you're seeing in terms of the overall spending environment? And you did mention that decisions are being made now. Is that changing in terms of maybe a pickup in demand? And how is the sales cycle?

Yes. So we have seen -- since that kind of going from Q1 into Q2, the sales cycles start to normalize and decisions be met. That's definitely manifested itself into a better sales trajectory and funnel trajectory. So we're still seeing that. We're believers that IT spending is going to grow. We see that in our own data. The funnel is a myopic variable that would support that data. I just read something this morning that IDC very much believes that IT spending will grow. And when I talk to my counterparts in the ecosystem, they're all expecting IT and technology growth from the enterprise. And we're all expecting success together. So yes, I think that we're really well positioned as the economy kind of comes out and continues to normalize here. We're in a good position to take share, and we think it's going to grow.

Okay. In the third quarter, we saw a bit of stability in terms of the sequential trends. Can we expect that to continue based on what you're seeing right now?

Yes. I mean, we saw some nice growth actually in large enterprise and in IGAM. And that growth came from the macro turns we've been discussing, right, healthier customers, more decisiveness. Specifically, we saw a lot of success in infrastructure products that are kind of bread and butter, right, like waves, dark fiber. In IGAM, we saw some more cloud services and cybersecurity services that we had seen previously. And we don't expect it to be a perfectly sequential line to growth. But we are cautiously optimistic as we work to get there. So we're expecting to get to overall top line growth. I think Jeff called out like kind of that 2- to 3-year time frame and that's a function of the success we're seeing from the Lumen platform investments as well as what we expect from the Quantum Fiber builds.

Okay. That's good to hear. And again, just going back to you will get to eventually year-over-year growth once we start to see stability on a sequential level as well. And I guess what you're seeing more recently is carrying on to fourth quarter and potentially early next year. Does that make sense?

Yes. The sales success, feeling good about that. The funnel is continuing to build. It keeps getting bigger. That bodes well for the future. Like I said, is it for certain that every single quarter will be perfectly sequential? Probably not. But we're cautiously optimistic that we can make that happen.

Okay. Great. Can we talk a little bit about maybe coming out of the pandemic or still in this environment, but what type of services the enterprises are demanding or looking for? Any change in what you -- what they're demanding prior to the pandemic levels?

Yes. So it's funny because we rebranded right in the middle of this mess. So we brought some outside help in that was kind of telling us what people wanted to buy. And we literally watched that accelerate when COVID first hit. And it was journey to the cloud. It was cloud-based security versus like premises-based security. It was unified communications. And it was managed services, people to help them design, consult, transition and then manage the capabilities they we're buying from technology companies. That has totally resonated throughout the past 18 months and continues to grow. There's only been one kind of odd raise its head and go away that we've seen during this past 18 months during the pandemic, and that was old school audio conferencing. When the pandemic first hit, it was kind of like any port in the storm and people were leveraging old-school audio conferencing to get through the day. We saw that rise within 2020 and decline at the end of 2020. And obviously, that's never coming back again.

Right. Actually, that was my first question, supposed to be my first question that I missed. It's now more than a year that you rebranded the company as Lumen. Has that changed the -- what has been the perception so far? And are you potentially seeing more interest than before?

Yes. I like that you call it rebranded and not renamed. If you think about myopically renaming it, you're missing it. We really did rebrand and we did it for two main constituents, external and internal. External, when we set out to rebrand, we had a new purpose and a new strategy. And we measured the success of that rebrand by awareness, perception and activity. And we're doing really well on all three of those fronts. 4 and 5 IT decision makers are now totally comfortable and aware of who Lumen is, what we do and what we can do for them. Even more importantly, the perception of IT decision-makers has turned, and that was hard, right? Like to change their perception of us as kind of a legacy telco to a go-forward technology company and make that real, that's been successful. Those two things lead to action, which is what my boss cares about, right? So now we have the awareness, we have the perception and we can kind of drive a marketing funnel in towards something like edge compute in towards something like Hyper DDoS. So with the external community, it's been great. Internally, if you think about everything we've been through as a community, rebranding with a new purpose to further human progress through technology has really helped the employees through this transition. It makes our work feel really purposeful. And then the things we're doing to go from a telco to a technology company make it palpable for them. So investing in the digital experience, bringing in different types of capabilities. We invested in a customer success organization. So they're really seeing it manifest and you can see it in the employee engagement scores that it's really resonating well with them.

Okay. Great. Maybe just going back to Enterprise demand again. I guess we're coming off of a period where they're looking for new hybrid solutions and potentially going more towards capabilities away from the legacy data products that they had been purchasing. Where are we in terms of that transition period? Is it -- are the decisions being made more getting -- maybe jumping ahead and just getting those SD-WAN capabilities? Or is it still a more hybrid portfolio?

Yes, you're making me feel like you're coming for my job here. That's exactly the way to think about it. When we were that legacy telecom company, we talked and thought only about that infrastructure that you're alluding to, right? Like the networking infrastructure, the connectivity infrastructure, and we're really good at it. We've got more scale and better IP peering than anybody else. But that's the conversation we had. Now what's resonating with the rebrand is starting with that CIO's business problems and she'll quickly take us to the words applications and data, right? So our value proposition, the fastest, most secure platform for next-generation applications and data, that resonates with her. Helping her acquire, analyze and act on data, that resonates with her. So we start almost -- Batya, it's like we start with the verbs, right, that she's trying to solve for, and then what comes along with the paperwork at the end is that connectivity. So what are you trying to accomplish? What applications are you trying to work? Move into what nodes? What cloud provider? Oh, you had a problem with one of your cloud providers today? How can we set something up so you can move more quickly? And then what comes with it is the connectivity and infrastructure that we've always been providing. So it's a big change.

Right. When we talk to our industry contacts or some of the CIOs, what we hear is that Lumen is definitely coming up more, more than before. But it's a competitive environment. And can you talk a little bit about that? Who are you going against in terms of trying to win these large contracts? Again, sticking with the Enterprise business. And you mentioned that in terms of your value proposition, does pricing become an important part of that decision-making as well?

Yes. I mean, at the simplest of the question, who are our competitors? We're still button up if you stand back far enough against AT&T and Verizon, right? They're large technology companies in the connectivity space and we bump into them quite a bit, especially with that core network services [ piece of the ] conversation. What we've done with our change in approach, changing conversation has taken things up the value stack a little bit. Along the way, we're bumping into different niche providers. So what we do is we think about who's the best cybersecurity provider from a niche perspective here? Who's really good at cloud-based unified communication services? Who's offering this WAF experience with CDN with an awesome digital experience? And when we measure ourselves, we do it versus each of those niche providers. So then when we stack that all up, that kind of default puts us in a really good competitive situation against a Verizon or an AT&T or an Orange or a Telefonica. The other part of your question was with that competitive pressure, is there a pricing change? And I hate when you asked this question because it makes me want to knock on wood, but there's always pricing pressure. But when we go up the stack and we start with that CIO and she's talking about driving revenue or employee turnover or cybersecurity, those conversations are so value-add that it waters down the pricing piece of it. So that's one aspect of it. The other aspect is we're good at driving operational efficiency. You can see that in our results over the last few years. And as we kind of drive that operational efficiency and can expand margins, that gives me some flexibility and some power on the pricing, right? So right now, it's always there. We're always watching it, but it doesn't feel like it's rising or changing or scarier than it was yesterday.

Okay. So as you compete with maybe the niche players, does it help that you have the connectivity piece in there? Is it still -- are the decisions are still being made on a bundled basis?

It does. Yes. So I was on a call earlier with some of your guests at a breakout and we were talking about like an Oreo cookie approach. And we think about it like an underlying wafer of infrastructure and connectivity. And sometimes we'll wrap a best-in-breed application partner in there; a Zoom, a Microsoft Teams, a Microsoft Azure. And then on the top wafer then is the managed services. And the thing that a lot of those application companies don't bring is connectivity and the Internet of Things and 4th IR is making connectivity so important in that whole story, right, of moving, acquiring, analyzing data. And then the managed services piece is something that we bring that a lot of times they don't. Large enterprises, when they want to move to the cloud or consume AWS or Azure or Google, we're a certified managed services provider in all those conversations. And a lot of times, the cloud provider will openly partner with us so that we can provide that service for their application. So the answer is yes.

Right. And it's going to be the same question, but maybe asked in sort of like a flipped way, where the worry with some of the traditional telephone companies are that you're going to be providing just the connectivity. And how do you ensure that you're not just sort of, let's call it, [ dump pipe ] going to the enterprise and you can win more of the mind share, wallet share of all these applications and managed services? Could there be a scenario where those niche players are actually grabbing that and the enterprises are just looking at -- for you to provide the cheapest connectivity?

Yes. I mean, we've -- with the rebrand, with our conversation with the investment in digital experience, we're moving farther away from that. Commoditization, almost what you're getting at. But the key is the service and the experience in wrapping an application, whether it's our application or someone else's application, wrapping that application with consulting, design, implementing, helping them migrate and then managed services on the back end. With connectivity and orchestration of that connectivity tied to the applications, that's something that we offer that is a differentiator and is driving the success.

Okay. And so looking at competition just for the connectivity part of it, you had the traditional AT&T, Verizon. Are you seeing cable coming into enterprise more and more beyond just the SME segment but moving up the ladder now?

It felt pretty constant. I mean, I can feel them continually wanting to move up. I would say that the relative competitiveness is somewhat stagnant, but we're all kind of elevating our game. Recently, we saw Comcast acquire Masergy. To me, that was clearly a move to do exactly what you're talking about, right? To help them move up that stack. So far, I'm not really seeing that turn out into something that's poking me in the eye every day. But yes, they're constantly trying to move upmarket. We're constantly trying to raise our game. So they're relatively, we kind of keep this competitive advantage, but we're always watching it.

Okay. And what about wireless? We're hearing a lot from wireless carriers, some of the new entrants, even technology companies kind of looking to build private enterprise solutions. Do you see that as potentially showing up as a bigger threat?

Yes. I mean, just like pricing, just like cable competition, just like supply side, we're constantly watching and we do so with a nervousness, right, like lean towards the nervousness. But no, I'm not seeing wireless in the enterprises. It's interesting that you mentioned you're hearing it from the wireless providers, probably not the enterprises themselves. I'm not seeing it show up in the day-to-day connectivity of an enterprise. Where I am seeing it, and you kind of alluded to it, was within like a private networking campus environment tied to IoT, tied to edge computing. That's why we doubled down on this partnership with T-Mobile. Where there's a warehouse or logistics and there's robots moving around untethered or telemedicine moving around untethered, you have a wireless aspect of that. And it's important that we can offer that whole managed experience. That's why we have these options to come and give them WiFi 6, CBRS, 5G, private LTE as part of that overall experience. So I'm seeing it there with IoT in the 4th IR. I'm not seeing it in that day-to-day enterprise connectivity.

Okay. And is that partnership nationwide?

Yes. In fact, we disclosed a large win with United States Postal Service, and that's a really concrete example of where that partnership came together with a massive nationwide opportunity win.

Okay. Okay. Let's move maybe to the IGAM part, where we started to see a little bit of growth there. What's driving that? And are there any maybe differences that you would highlight versus the U.S., which could continue to maybe accelerate that growth?

Yes. So in IGAM, we had, not only quarter-over-quarter growth, but I think we did -- we also had annualized growth in the quarter for IGAM. We saw good success with the infrastructure products like dark fiber and waves. We had some good success with hybrid cloud and security. And then we've been seeing an uptick in engagements for the design, consult implementation, the managed services piece within IGAM. We also are having some strong green shoots out of EMEA. So we have a new leader in EMEA. So we have a new leader, she's absolutely fantastic. And I'm drinking -- drinking of her Kool-Aid because she's got a lot of things moving up into the right -- within EMEA itself. So that's kind of fun to watch. As far as differences within IGAM, if you kind of think about it from a regional perspective, first and foremost, there's no mass markets consumer businesses in any of the regions outside of North America. So that's kind of a big, obvious difference. Second, globally, we kind of have this model where you are focused on the A-end headquartered relationships within your region, but you're also solving for the B-end part of the relationship for a different region's headquartered location, if that makes sense. And in the regions, there's probably more B-end to A-end ratio than there is in North America. So that's a little bit of a difference, especially in Asia. There's a big focus on B-end services for companies headquartered out of EMEA in North America. EMEA is slower behind the adoption curve on cloud. It's narrowing, but that's palpable. You can kind of see that difference. And then there's a different competitive stack within EMEA itself. There's a lot of PE-backed fiber companies that are kind of piecemealed throughout EMEA that make that feel different than it does in North America.

Maybe in Europe, we're also seeing a little bit more -- we have seen faster convergence of fixed and mobile networks. Is that opportunity creating more attractive solutions for Enterprise that maybe you're not participating in?

That hasn't resonated so much. It isn't like popping up on my screen, but it's also probably my guess is that starting more down market and moving up, right? And because we don't kind of have that mass markets feel to EMEA, we're probably not seeing it as much as we would have otherwise.

Okay. That makes sense. Then wholesale segment, which is still a large part of your overall, declining at high single-digit rates. I guess there's a big chunk of legacy in there, which is sort of [ bolus ] driven. How do we think about that segment over time?

Yes. A, scale, right? Like how can we offer our infrastructure footprint and scale to wholesale to help us maintain scale? That's one. Two, the dense metro. How can we take our dense metro assets and take advantage of the wireless build plans. They've all got just aspirational -- huge 5G build plans. How can we leverage those assets and make sure we're part of those build plans? And then lastly, it's really a balance of making sure that we're investing in the experience for the wholesale customers and keeping them thrilled and helping them do well, yet do so in a way that manages for cash rather than some over-the-top investment business plan like we see in Enterprise or in Quantum Fiber.

Okay. Maybe within wholesale, wireless backhaul business was a business that used to dominate before -- at least in the incumbent footprint, lost some share. As you build Quantum Fiber back, is that also an opportunity to gain back? Are you seeing a bit of that move right now?

Yes. I mean, sometimes, I think that it feels like we're losing ground there because it's one of many things we have in one of many things we talk about. We have some competitors that that's kind of their only game. So it feels like they're doing better because they talk about it so much. We continue to have success there. Quantum Fiber build in of itself doesn't necessarily help that story. But where it helps that story is how we decide where to build. And where we decide to build for Quantum Fiber when we're doing that, and we look at the addressable market and the ROI in those 16 remaining states. We also look at the public sector business that's in town. And we look at the mid-markets and the large enterprise business that's in town. And we look at the wholesale business that's in town and where are the 5G builders going and then vice versa, right? So you can imagine how that comes into a big data set to decide where we're going to build. And often, when we build for one, it benefits the others.

Got it. So another business that could benefit from Quantum build could be the mid-market, which is actually still declining. But I think you're seeing more cable competition there. And cable companies are saying that there is -- they would expect accelerating growth to continue in that region, so they're not pulling back. How do you respond? And what do you think the trends could be in that segment?

Yes. So we don't all use the same nomenclature. We've tied small business to consumer within mass markets. That historically hasn't been a big focus for us. But as we invest in Quantum Fiber and we're talking about locations passed, it's because in that word locations are consumers and small businesses. And you will see, over time, the ratio of small business to consumer start to move more towards small business because we're having a lot of percentage success there. Specific to your question about mid-market, we're still seeing the cable providers and the over-the-top VoIP providers as kind of the main competitors in that space. We have very low share. We have a lot of opportunity. And what we're doing is really focusing on taking all the assets that we have but making sure that they're simplified and offered in a completely digital experience. And a big part of my road map and investment going into next year is about having an all-digital e-commerce experience across learn, buy, get, use, pay, renew for those kind of simplified mid-market products that they're looking for to run their business. So lots of upside there.

Okay. That's actually great to hear. Can you provide a little bit more color in terms of that investment, what it would include and in sort of where are we now? Is it going to happen through next year?

Yes. So for the marketing side of our funnel, we've always been an Adobe shop, and we leverage that relationship really well. We're good at that. But we haven't done as good of a job as investing in just a kick-ass experience for once you kind of pull a customer in to help them onboard digitally to -- all by themselves. So we've got a really accelerated road map to be -- starts in Q1, where you'll be able to kind of carry through that journey, right, of awareness and perception and activity into an e-commerce experience that's completely digital, where you'll be able to buy some broadband and then you'll be able to add some UCC solutions to that. And you'll get security as an ingredient as part of it rather than a separate conversation. That's how that mid-market segment wants to interact with us, and we'll be starting in Q1. We're going fast.

Okay. And what about the distribution channel to support that growth? Is that all in place? And are you -- yes.

Yes. So it's threefold. One is we do have in-market sellers, Lumen employees focused on that space. Two is really e-commerce itself, and an all-digital motion is almost a new channel in some ways as you enable that. And then part of that same conversation is a focus on the indirect channel. And we've always had fantastic relationships with the indirect channel, but we're putting more investment into the APIs and the digital tethers into the indirect channel to enable them to have more success with us in mid-market.

Got it. Okay. And maybe Quantum Fiber now. Can you talk a little bit about the opportunity? But also I guess from your perspective, what changed that we're hearing it from across the telco space or the [ PE ] shops, that there is more investment for fiber? Is it the cost side? Is it the demand side? Can you provide a little bit more why you think Quantum Fiber investments need to happen now?

Broadly, yes. I mean, it's hard for me to answer for them. I can tell you that, from our perspective, it's two things. One is the divestiture to Apollo and divesting those ILEC assets in those 20 states, right? What did that do for us? Well, A, it got us a big chunk of money. I think that, tied with the Stonepeak LATAM transaction, is going to bring in $10 billion gross, like $7 billion after you account for transitioning debt and what have you. But it also allows for a really strong focus in the remaining 16 states. So that's a pivotal thing for us. We've got -- we're long on engineers and finance folks over here, right? So when they can really focus in and put pen to paper and get a strong ROI, that really just kind of increases our appetite for investment. So the divestiture was a pivotal moment for us there. The other one is the success we're having with the Quantum Fiber launch. So 2 years ago, we didn't have the Quantum Fiber launch. Now Quantum Fiber is out in the market. It's resonating. We're reaching the penetration rates we want. And it's really thrilling customers with crazy high NPS scores. So you kind of take the success that Maxine is seeing with Quantum Fiber and the increased focus as a result of the divestiture, and that's what gets us to the plan to kind of double down and dramatically increase build.

Okay. And I believe after the divestitures you'll have a little bit over 2 million locations passed with Quantum Fiber. Planning to get that to about 12 million. How [ orderly ] do you think we'll see that deployment? And what does that depend?

Yes. So historically, I think we've been about 400,000 locations added a year. Next year, we're going to add 1 million, right? So year-to-year, that's a 2.5x rate. We want to leave next year at a run rate of adding about 1.5 million to 2 million, right? So a year from now, we'll be a little smarter. Are we on the 1.5 million end or the 2 million end? And that will help us kind of draw a line to how to get to 12 million. What are the levers we've got to drive to go fast? So right now, resourcing, onboarding people, human capital, how you organize the work, that's happening. Partners, within each market, like where we're going to partner, where we're going to do it ourselves, making sure that those relationships and metrics are stood up, that's two. And then the paperwork with zoning and permitting, getting that. That can be a long pole in the tent, so going really fast with that and getting a process such that that's never part of the bill, right? That gets done in advance and then you can just kind of sit down to the table and eat. Those are the three focus areas so that we can go fast.

In terms of the current environment, maybe supply chain issues or labor, do you anticipate kind of like to start at a good pace early in the year? Or there are some metrics to look out for?

Yes. We're -- we talk about the supply side constantly as well. We're managing it almost as if it is a problem, if that makes sense, kind of proactively. We have a lot of scale and we're a big customer where all these conversations are concerned, so that helps. Right now, it's not really in our face, but we'll continue to manage that and make sure it doesn't become a challenge. But yes, we fully expect to deliver on the 1 million locations passed next year.

Got it. And as you pass these homes and sort of maybe shift marketing towards penetration gains, how -- what do you think your value proposition would be? Do you anticipate to compete more on pricing because you're kind of like the new comer into the base? Or is making returns on that investment as quickly as possible, which is also an important metric?

Yes. So first of all, just kind of the nature of the bidirectional fiber in and of itself is an advantage. And that's always at the core of our value proposition. That doesn't always resonate with customers. So the way that we talk about it will be much more about the experience. And I can tell you that if you're -- if you have Quantum Fiber in your area, the onboarding and service experience and the digital nature of it is absolutely fantastic, and the NPS scores are through the roof. So we will compete on a basis of value and a digital experience over a better infrastructure of fiber. To the pricing question specifically, we do pricing within Quantum Fiber on a market-by-market basis. So market c, where there's tons of competition, we'll have a different pricing approach to drive growth profitably than we might in market g where maybe there's only one competitor and they're long in the tooth and the experience isn't that good. You could imagine how we would have a different pricing approach to drive profitable share in one versus the other.

Got it. And where do you think your overall ambition would be in terms of penetration rates in a fiber footprint versus a nonfiber footprint?

Yes. I don't know if we've disclosed this previously, but it's -- 40% is the goal of the...

[Indiscernible]

Yes. We've seen that where we've deployed Quantum Fiber, and we have proof points with that tied with the NPS results that we provide that it's 40%. And that varies a little bit depending to how many competitors and which competitors are in the market. But if I had to give a number, that's the number I would give.

Okay. Great. And maybe just shifting to capital spending. The quantum build is going to require significant CapEx. I think you've said about $1,000 a home to pass these locations with -- per-location to pass them with fiber. And then there's that connect element of it as well. And if so -- I assume that, that's a big priority looking out the next few years. When you think about the nonfiber CapEx or ex-fiber builds, fiber is still in the core of it, but what will be the focus in terms of how you allocate the remaining capital investment dollars?

Yes, that's a big question, right, because we've got a lot of levers and a lot of options and a lot of degrees of freedom with the divestitures. First and foremost is that growth that you nailed, right? So yes, we covered Quantum Fiber. But the Enterprise business is like 3/4 of the revenue. So investing in the Lumen platform, edge computing, core network services, unified communications, wrapping those with security as an ingredient, wrapping those with managed services. All of that feature functionality, but almost more importantly, Batya, is the digital experience of those features and capabilities. There's a huge investment going into next year tied to that digital experience. We talked a little bit about it on mid-markets with the onboarding experience. But there's many conversations about the digital experience with APIs. There's conversations about improving the digital experience for the [ SAL ] process for salespeople, for automation on the back end for tooling. So huge investment in digital. And then there's other options that are priorities, maintaining the dividend with capital, right? Like Jeff came out and was very clear, the Board believes that maintaining that $1 per share dividend is a core part of our value proposition. We're comfortable maintaining that dividend and have no plans to adjust it. And we really see that while there may be a little bit of a pressure on the ratio and that might change through this investment cycle, when we get to that overall top line growth in 2 to 3 years, we'll see that ratio normalize. We're going to see the opportunity to pay down debt, but we expect to kind of keep that neutral. And we're willing to get to that $2.75 million to $3.25 million debt-to-equity ratio in a slightly elongated time frame while we're going through this investment cycle. We'll continue to look at rationalizing the portfolio. And where it makes sense to rationalize the portfolio, we're in no urgency to divest anything. But where it makes sense, we'll continue to look at that. And then we'll continue to look for opportunities to have additional share repurchases. We jumped on the 1 billion pretty quickly. We were able to take, I think, about 81 million shares off the table, which really reduces our dividend payment. And we'll look for the opportunity to jump back in, if the Board decides that's the right decision for shareholders. So those are kind of the levers that we're looking in order from a CapEx or a capital perspective.

Right. That's a good summary of capital allocation. Maybe in terms of the uses of cash, as you look out what -- where demand is going to be, how enterprises are going to lean into this digital -- if demand for digital infrastructure, do you see -- do you think that you need to own more assets at the edge of the network to grab sort of more mind share of that? Or do you feel you're going to reach that by just continuing to deploy fiber, focus on connectivity, reaching out to enterprises and...

I mean, we'll always be adding connectivity to buildings, and we'll always be upgrading fiber and adding footprint and scale. But it's -- no. I mean, we don't -- I don't believe that I need a whole collection more of assets to drive success. If you think about edge computing and the assets that you need, we talked about -- like the space, power, compute in the right geographic place, we've got that. The connectivity to enterprises, the connectivity to cloud providers, the connectivity to data centers, the IP peering prowess, I like where we sit with all those asset conversations. So really from a CapEx allocation, if you looked at where we're investing, it's less about nouns and more about verbs. It's more about orchestration. It's more about the digital experience. It's more about providing that CIO with the ability to move her applications across for cloud venues to the Lumen Edge -- back to Lumen Edge gateway on-premises and spin up connectivity and capacity across all those assets. So I like the assets we have. I just want to invest in the digital experience for customers to take advantage of them more easily.

Okay. That's great. I think that's all the time that we had. Thank you so much.

That was a lot. I'm hyper caffeinated. So I apologize for -- but thanks for the time.

It was awesome. Thanks so much.

Thanks, Batya. Bye.