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

Good afternoon and good morning, depending on where you're dialing in from, and welcome back to Citi’s AppsEconomy Conference. For those of you I haven't met, I'm Mike Rollins and I cover the communications services and infrastructure stocks at Citi. Before we begin, just a note that we do have disclosures available to the right of the video player or under the Citi disclosures tab if you're viewing this via Velocity. [Operator Instructions] With those details out of the way, it's a real pleasure to welcome back to the conference, Jeff Storey, President and CEO of Lumen. Jeff, thanks for joining us today.

Thank you for having me. I'm happy to be here.

Well, Jeff, it's been a busy 2021 for you. And so as you now look forward into 2022, can you give us an update on your key priorities strategically and operationally for the business?

Yes. Our top priority is revenue growth and we're very focused on that. 2022 will be somewhat an investment year for Lumen, both in CapEx and in OpEx. CapEx is generally success-based initiatives that we have, but OpEx is a little more proactive, investing in things like product development, marketing, brands and other go-to-market initiatives that we have. We'll continue to focus on investing and augmenting the Lumen platform. We believe it's a great way to enable new technologies and expand our capabilities and our addressable market. We've already announced our accelerated Quantum Fiber build and plan to add more than 12 million locations over the coming years in the remaining 16 states that we operate in, in those states. Lastly, we continue to invest in transforming our business for a better customer experience and operational efficiencies. We've done a great job of improving our customer experience at the same time taking cost out of the business by using the technologies that we sell to our customers and using other technologies in our business.

You referenced some of the changes that Lumen is making to the asset base in terms of reducing the number of states from a local incumbent wireline perspective that you're going to be operating. You're also divesting Latin America. Are there some changes in the go-forward strategy for Lumen that might be underappreciated just given the announcement of these items over the course of last year?

I don't know whether they're appreciated or not, but the Apollo and Stonepeak transactions give us the ability to remain -- or to keep our focus on the remaining assets within the business. I mentioned that we're moving from 36 states to 16 states in our traditional footprint. When we look at Quantum Fiber, we will focus all of our investments in those 16 states. That territory has higher concentration of addressable locations, something like 70% is in urban or suburban areas, which we feel is really ideal for the Quantum Fiber investments. And we're extremely excited about Quantum Fiber. We have a unique opportunity to target some of the most attractive markets in the country. Significant opportunities with our larger business segment. There's a growing appetite among customers for next-generation services. The world is moving to a hybrid workforce, hybrid computing, hybrid networking and the digital experiences that we offer are becoming more important and more relevant to our customers. It's not just innovation, though. It's also about evolution and evolutionary steps. For instance, network and security are coming together with models like SASE, combining Zero Trust SD-WAN and edge services together. And we continue delivering collaboration platforms with all the underlying network and SIP services bundled together and partnering with great partners to do some of that.

Just as we're moving over to focus on what's going to be the core business for Lumen going forward, are there just any updates that you want to share on the 2 pending divestitures just in terms of timing or any other updates that would be important for investors?

Now we expect the sale of the LATAM assets to Stonepeak to close during the first half of the year. And we -- the ILEC assets -- the 20 states of ILEC assets to Apollo will take a little longer, but we're still looking at the second half of the year for that. And we feel we're making good progress on both deals and don't really see any major regulatory hurdles.

As I think about the category and I think about the last few years, it feels like fiber and data communications have never been more important. And yet on the business revenue for Lumen, it seems to lag the demand and you've had some revenue declines over the past year in that business and wholesale category broadly. Can you unpack a bit of what's holding back that revenue and the opportunities for Lumen to get back to that priority that you're outlining at the beginning of our discussion, which is revenue growth?

Yes. Well, first of all, you're right, fiber and data communications are more important than ever. But we don't just look at it as data growth opportunity. For example, enterprises are shifting, and I already said this, but more and more to hybrid environments with hybrid employees, hybrid computing, hybrid network to connect those employees to computing, the applications that they use in the most sensible manner. We look at combining our fiber infrastructure with capabilities like SASE, edge computing and Dynamic Connections. Dynamic Connections is really our Network-as-a-Service capability. We create hybrid computing and networking environments that empower the enterprises to acquire, analyze and act on their data. Delivered over the Lumen platform, we enable new technologies and expanding our addressable market. And we believe we're in a great position to deliver. At the beginning of last year, we announced we'd have edge computing resources within 5 milliseconds for 95% of U.S. enterprises by the end of the year. We actually completed that somewhere in the middle of June, July, and today, we're around 97%. So we believe we have a great infrastructure tightly coupled with our fiber capabilities, and we think there's a great opportunity. Lumen and industry analysts agree that there's a major opportunity with tens of billions of dollars in revenue potential. But it's more than focusing on one product. It's our ability to combine our services into holistic solutions for our Enterprise customers. As I mentioned, some of the examples include SASE and other capabilities. We're delivering all of these over one of the world's most extensive fiber infrastructures and one of the world's most connected and largest IT infrastructure. So we believe we're in a really good position to continue to deliver on the demand change that you're addressing.

And when you look at just the headwinds that the business has experienced in terms of the revenue headwinds, is it competition that's hurting the revenues? Is it just migration to cheaper technology and more efficient technology? What are the factors if there's -- I know it's hard because you have so many customers in so many segments and products, but is there just a way to kind of help investors appreciate maybe what's going -- what's holding back that revenue in the moment, and how that might change in the future?

Yes. So there are some places where competition, some market segments where competition is an issue. But the larger issue is technology migration. And we've seen that in our business for years and years. Every 2, 3, 4 years, there are technology changes and we've been very adaptive and very good at managing those businesses through that technology change. I remember, in our past, we were the largest managed modem supplier in the world. And it was 4 or 5 years that we knew that business was dying. And we managed it for cash as we transitioned to things like MPLS and VPN and managed hundreds of millions of dollars of free cash flow out of the business long after we knew that it was not an ongoing business. So we're very good at managing the life cycle of products and we're very good at adapting. If you look at edge computing, we think that's a great opportunity for us and we've built the infrastructure necessary. We've worked with partners to make sure that we have the capabilities across the platform to deliver on that, and we'll continue to manage those things that are waxing and waning.

What are you seeing in terms of the sales funnels and demand environment with this latest wave in the pandemic? Has that hurt decision-making? Has that hurt the sales process? Or are things moving in a direction that you like?

Well, I'll give you an update on the fourth quarter during our fourth quarter call. But with respect to the third quarter, we were very pleased with the sales momentum and the funnel growing since about March of last year. And if you look at that, as you'll recall, IGAM and large Enterprise revenues were particularly sharp driven by demand for fiber infrastructure, wavelengths, other types of high-capacity services. So we're pleased that since March and through the third quarter kind of returned to -- actually exceeded prepandemic levels. I don't really know how Delta and Omicron variants are going to affect us moving forward, and I'll talk about the fourth quarter in a few weeks. But through the third quarter, we've seen a return. So I'm hopeful that other than mid-markets, most of that is behind us. Mid-markets continues to struggle a little bit, those customers struggle with COVID a little more than large enterprise customers.

And so you mentioned technologies. If you think holistically about what's been hanging on the revenue, you mentioned technology is one of those bigger issues. Internally, do you think about how much of your revenue is strategic versus legacy? And can you unpack some of that for us just in terms of sizing?

Yes. We do think that some things as growing, some things as declining, some things as managed for cash. I really won't unpack with all the numbers. But if you look at large Enterprise and IGAM, we think those are growing market segments. I think mid-markets is a growth opportunity for us. But again, they're struggling a little bit with COVID. If you look at consumer and our small business, we think those are great opportunities for us. We've announced that we're going to invest to build out the more than 12 million locations with Quantum Fiber. We think that is a huge opportunity for our consumer and small business. Wholesale, wholesale tends to be one of those businesses we manage for cash. If you look at from a product segment perspective, voice and other, we will continue to manage those things for cash. We think they're going to continue to decline, but we'll manage them for cash. And we've done a great job if you look at the -- over the last couple of years of transformation synergies, of integration synergies. We'll continue to focus on that and I think there's further opportunities in front of us.

Over the last number of years, there's been significant consolidation of networks, but there's also been the introduction of software-defined networking and some fragmentation of the environment. How do you look for each of your major segments, the IGAM, large Enterprise, the mid-markets, how are you looking at the competitive landscape? Is it stable? Is it getting tougher? Is it getting easier? Maybe for each of these, you can give us a sense of what you're seeing there.

I don't think it's getting tougher. I think that it's up to us to perform. If we execute well, if we continue to improve the customer experience, if we augment the Lumen platform, if we pick industry-leading partners like Microsoft and T-Mobile and VMware and others that we've announced, Zoom, we'll continue to bring the capabilities to our customers. And how we deliver that makes the difference. If we -- fiber wins, first of all. If you're competing with any other technology, fiber wins, and we'll continue to deliver the majority of our services over fiber infrastructure and integrate those capabilities into an all-digital experience. And when you do that, I think Lumen wins.

When you look at your fiber presence, is there a summary that you can share of how many markets or geographies where you feel Lumen, because of fiber, has a real advantage over your competition?

Well, everywhere that we operate, I believe that we have a real advantage because we are a fiber-based platform. We are a fiber platform bringing our services to our customers with the connectivity of the fiber, but also the connectivity to the world's tools of demand so all of the cloud service providers, major data server providers, private networking data centers or private data centers of our customers, but also eyeball networks. We are so interconnected on our IT infrastructure. If we can deliver these capabilities or retrieve these capabilities for work at home and others regardless of where the customer is, wherever they need their data to be, we're in an excellent position to make sure that we can help them acquire their data, analyze their data through all of these different cloud options, including the Lumen edge cloud and then act on their data.

You mentioned at the onset of the discussion that '22 is an investment year in some respects. Can you talk a little bit more about the investments and maybe size some of those investments that you're going to be making in product and distribution and how this helps the Lumen strategy?

Sure. Well, the -- we announced last year our edge computing. That investment -- there are 2 ways that you invest in things like that. One is to get coverage. Our coverage investment is done. We're at 97% of the U.S. enterprises within 5 milliseconds of latency from one of our edge facilities. By combining our fiber network and the location of our edge facilities we're 97% within 5 milliseconds. So that coverage investment is done. We will continue to invest for density, for capacity. As our customers are buying more and more services from us, we'll continue to invest within that footprint to augment capacity. So that will be more success-based. We've announced that we will invest over the next few years to build out a 12 million-plus locations. We have about 2.5 million, using rough numbers, today. So that's about 10 million more locations. We said that, in general, we target less than $1,000 per home. So you can do the math on that. It's a fairly significant investment over the next 4 to 5 years, but we're really pleased with the progress that we've made over the past couple of years and think that there's -- it's a great opportunity for us. If you look, that's a significant ramping from where we've been. We've been investing about 400,000 new locations passed every year, been very strategic and targeted, micro-targeted in our approach to it. We wanted to build the all-digital experience of the Quantum Fiber platform. We've done that. Our NPS scores are really exceptional for Quantum Fiber. And so we've proven that we can build successfully. We've proven that we can deliver successfully and build all of the systems around the customer necessary to do that. So we'll continue to invest there. And I also mentioned that we would be investing in OpEx. This is a year when we need to do the types of things I talked about: continue to invest in product development; continue to invest in our brand; continue to invest in the resources necessary to sell, provide and develop all of these capabilities that our customers are really wanting.

So we have some questions that came in regarding the Quantum Fiber strategy. And so one question is, what's led Lumen to change its view? Where beforehand, as you mentioned, you were going a little bit slower in the build, 400,000 a year. What changed that led Lumen to accelerate the build-out of Quantum Fiber?

I don't think there's any change, actually. This is the path we've been on, but we needed to do the prep work to get ready for it. We needed to have the all-digital experience. We needed to continue to enhance our capabilities. And we wanted to prove to ourselves through micro-targeting that we had all of those capabilities to understand what they are, develop them. And so it's not -- there's no change in the strategy. There's an acceleration of the strategy because we think we have all those things in place. Our NPS scores show it. Our penetration rates show it. We think we have all of the capabilities in place. Now we just really want to ramp more aggressively. We said that we were -- we've historically been at about 400,000 locations pass added every year. We've said that we will do about 1 million locations in 2022, and we'll finish the year at a run rate of about 1.5 million to 2 million locations passed in '23 and beyond. And so it's really the continuation of the strategy we've had. But now we have all the pieces in place to make that acceleration.

We also get the question that you had the opportunity to rewrite this consumer playbook as well as capital allocation. Why not move even faster, do more homes more quickly, given the success that you've seen in those micro-targeting examples?

Well, first of all, I just said, we're going to ramp from about 5x what our historical number is. So that's pretty quick. We're going to do that over the course of the next year. So I think that we are being aggressive. And I think you're right, and it's exactly what we've done. We've rewritten the consumer playbook by launching our all-digital fiber brand. We are ramping to 5x the level. We've articulated our approach to these things. And we think that we have a great cost position in our ability to deliver for less than $1,000 per home passed -- or at $1,000 per home passed. And we think we're maximizing shareholder value with our timing and expect to return to top line revenue growth in the next 2 to 3 years.

And as you're building out this fiber, how does that relate to the SMB opportunity in terms of being able to improve share there? And are you seeing any incremental competition whether it's from cable or from other sources?

I don't see any incremental competition. But the reason I know I don't say home pass and I say location pass, if you parse my words from before, it's because SMB is an important part of that. We believe that as we go by consumers, we're going by small and medium business customers, we think the capabilities that we deliver in mass markets in general, apply to consumers and they apply to small businesses. So we think there's a great opportunity for us to continue to expand our capabilities and expand our footprint and expand our market share.

A few minutes ago, you were talking about partnerships that Lumen has. And I'm curious if you could talk a little bit more about what might be unique about these partnerships and how they help Lumen, not just from a product perspective, but from a sales perspective?

Well, first of all, we pick excellent partners. So we don't just go out and pick every capability. We integrate those partners into the Lumen platform so that we can sell their services and integrate those solutions for our customers. But we also give our partners the ability to sell Lumen services through the platform. And so we think there's a synergistic effect by having them. We also pick the best-in-class. If you look at virtualization, we partnered with VMware. If you look at some of our SASE, SD-WAN solutions, we partner with VMware and Cisco and others. We partnered with Microsoft Azure for cloud services. We partnered with Zoom to provide capabilities like this call to our customers and to their customers more effectively. We continue to pick great partners that have capabilities that our customers value that we can deliver collectively over the Lumen platform. We think that's unique in the market.

Can you talk about the T-Mobile partnership in terms of providing wireless service to business? How important is that? And is that something that can also port over to the consumer Quantum opportunity?

T-Mobile is -- we've got a long history with T-Mobile. We've got a great relationship with them. They're an excellent provider. We provide a lot of services to them. So we'll continue to expand that partnership with them. We think wireless is important to Lumen from a campus area and networking perspective. We know that when you get to a factory floor, you want to operate that factory floor wirelessly. And so partnering with T-Mobile gives us great capabilities to do that. But we also know, as soon as the communications leaves the factory floor and goes to the rest of the campus or goes to the rest of the world or where the compute resources are for those terabytes worth of data that come out of it, we know that fiber is the best solution. We know that our edge computing, locating those computing resources within 5 milliseconds, is the machine. The machine is important because, within that, you can act if they're within the same premise. So we know that those capabilities are very important. So T-Mobile is excellent for us, excellent relationship with -- for us. Once it gets to the edge of the building, the fiber solution becomes the winner again.

And would you partner with them in the future on the consumer side to offer bundles to your consumers and SMB customers?

Look, we're open to making smart decisions. So I'm not going to -- I don't speculate on what relationships we might build or how we might go. But if it makes sense for us, we will. I do believe that fiber, even on the consumer business, except around the edges, fiber is the best solution. When it gets to rural, maybe a little bit more, but 70% of our footprint will be in urban and suburban markets. That's part of our Quantum Fiber strategy is to focus on dense urban clusters and make sure that we continue to expand it. If you look at the 20 states we sold, those are more rural properties. And we have focused on making sure that within the 16 remaining states, we're focused on big urban clusters where we think Quantum Fiber is an ideal solution.

And maybe if we take a step back and talk about the cost structure of the business, what are the opportunities and maybe the size of the opportunities for Lumen to drive more efficiency or cost-cutting through the organization, especially with the asset mix changes that are upcoming, and to think about what that means for the margins over time for the business.

Yes. Mike, you and I have talked about this before. Cost-cutting is not one of my objectives. My objective is to provide a great customer experience. But we know that where we're providing a poor customer experience that where our costs go up. If customers have to call us because they have a service interruption, it drives our cost in our call centers. If customers are not receiving the experience, that it takes too long to install services, it drives our costs up. And so we really are focused on how do we drive a better customer experience because we think that enables growth. We think it makes customers stickier. We think it makes them buy more. So we focus on driving a great customer experience. Now having said that, we're really good at doing that through the use of new technologies, new processes, new ways of thinking. And if you look at the cost that we've taken out of the business since the acquisition of Level 3, it's been very significant. Whether they were integration synergies or whether they were transformation synergies, we've been -- they've been very significant. I still think we have opportunities to improve our customer experience. I think our digital experience is critical for that, our Lumen platform, our Quantum platform, being a fiber platform company, is critical to that. And as we transition -- and I've said this before, as we transition from being a telecom company to a technology company, there are all sorts of cost/benefits that come from that. And interacting with our customers at the application level so things like software-defined network has helped us from a cost perspective, integrating security and access through SASE helps us, helps drive the customer experience, introduces products that customers want, but it also helps us take cost out of the business. So I still think there are lots of opportunities in front of us.

Is the asset mix that you have now stable? Or is there room for further optimization or monetization as you look what's left in the portfolio?

Yes. Look, I pride ourselves on being smart. And as you saw with our sale of the 20 states to Apollo and our sale of LATAM to Stonepeak, we're open to doing smart things. But as you also saw, we started that process about 2 years earlier that we announced the deals. So we're very disciplined and we want to make sure that we get good multiples and it's strategically valid. If you look at the Apollo transaction, it's also part of why we think we're undervalued. If you look at the Apollo transaction, we sold 20 states that we were not investing in at 5.5x multiple. I think it's -- they're great businesses. They're great states, great opportunities for Apollo to really accelerate that. But we weren't willing to invest the capital necessary to do it. So we waited. We worked with them. We came up with the right deal for it. LATAM, we sold it at a 9x multiple. That's how -- that's our Enterprise business, but not one where we were investing particularly heavy. We have focused our investments in North America, and we'll continue to do so. So we will look at things that make sense. And I said this in one of our earnings calls, it's not just CEO speak that we're open to different options. We've proven it. We'll continue to be open to different options. And we'll be smart about and disciplined and patient about what makes sense for the rationalization of our asset portfolio.

You also referenced that you're moving from a telecom to a technology company. And as you're making this migration, are there assets that you feel you need, processes, talent? Are there things that you need that Lumen doesn't have today as you're making this transition?

Absolutely. I mean we have to continue to invest in our talent, making sure that we transition to the right type of workforce to deliver those capabilities. And I'm perpetually dissatisfied. So I'll -- I can give you a list of things I think we need to do better to make the transition to a technology company. I am pleased with what we've accomplished with the Lumen platform, with the software development, with the integration of the network within our customers' environments. But we need to continue those types of things. Managed services, we need to continue to enhance our managed services capabilities to help our customers understand and utilize these technologies more effectively. We worked on a project for a customer where we were automating -- we were providing the network connectivity to automate their factory floor. And their managed service provider, which was doing all the actual automation, was failing to deliver. Well, we picked up in the middle of the project not only the networking side of it, but the automation side of it. We need to make sure that we continue to enhance our capabilities. We did a great job for them. Everything has worked really well. And we recognize the value of integrating managed services of the factory floor with the managed services of the network and with the network itself. So we need to continue to augment some of those types of capabilities.

Moving over to capital allocation. So the decision to maintain the dividend. The dividend yield, right now, I think, is in the mid-7s. And what do you think the market may be under-appreciating about Lumen's capital allocation strategy that bolstered the Board's confidence to sustain the current dividend and list that as one of the priorities as part of the refresh that was disclosed last year?

Yes. I don't know if the market misses it or not, but we have no plans to decrease our dividend. Our Board believes that it's an important part of our shareholder value. Our Board and I believe that it is sustainable at $1 per share. So we're very comfortable with the $1 per share. We do expect payout ratios to increase in the near term as we make this transition to growth. And -- but we'll also, more or less, maintain our current leverage ratios more or less level through the investment cycle. We still think that our 2.75x to 3.25x net debt-to-adjusted EBITDA is the right ratio over the long term. But again, we'll maintain it more or less at the current level over the next -- through the investment cycle period. And we're continuing to invest in accelerating our growth in Enterprise and in our Quantum Fiber.

How important is getting back to positive revenue growth to supporting the dividend? And is there a time or inflection point on the horizon that investors should be thinking through?

The time is 2 to 3 years. And top line revenue growth is just an important period. So whether it's the dividend or whether it's to demonstrate the capabilities of our network and the value of those customers, returning to top line revenue growth is just an important period for across our company as is our almost singular focus and we expect it to take a couple of more years, 2 to 3 more years.

And when you look at the Quantum Fiber investments that you're planning, can you remind us of the market share or the penetration that you're underwriting for that investment?

We look at -- our target is around 40% penetration. We think that's achievable. Our cost target is around $1,000 per home -- location pass. We think that's achievable because of our dense urban cluster strategy, but we really look at -- and we've proven both of those numbers through our 400,000 location builds over the last few years. So we think we have pretty high confidence in those types of targets.

The one question that comes up is whether or not the change in the competitive landscape with cable companies now bundling mobile into broadband and wireless companies offering fixed wireless broadband with some significant speed options, do either of these change the timing or the level of penetration that Lumen would expect to achieve over a multiyear period of time?

No. With respect to fixed wireless, I don't worry about fixed wireless. If I can build fiber to whatever location, whether it's a large enterprise building, a small enterprise building, the consumer home, fiber wins. And so when it comes to fixed wireless, I'm not concerned about it. I pay attention, I'm not oblivious to their going to be a market competitor. But I believe our solution wins. The symmetrical nature of our product the capacities of our products, the security of our products, our ability to integrate network-based security into that solution, I think, all -- fiber wins. When it comes to bundling, we've seen -- if you look at our broadband business, it's been growing. It is growing business and we think that, that's a very healthy stand-alone capability, and then we think bundles are less and less valuable to customers over time.

When you look at the global and large enterprise business, do you think about the important customer set is Fortune 1000 or Fortune 2000? And if you have sort of that addressable market that you're targeting, what penetration or share of those are you currently serving just from a frame of reference perspective?

We don't give out the penetration rates of the market share. But absolutely, those are important customers to us. And it's not just the size, but it's those companies tend can to be hybrid in their environment. They have cloud applications. They have edge applications. They have work-from-home needs. They have thousands of locations that they're trying to serve. And so those are certainly all target customers of ours, but not just because the number of employees or the size of the revenue, but how they tend to operate and what needs they have from a hybrid communications infrastructure standpoint. And they're almost always fiber based on our network.

And with the infrastructure bill, what are the opportunities for Lumen to participate, whether it's on the resi and mass-market side or even on the business side, to be able to participate in funding and leverage that to go after new opportunities?

Well, we'll see. It's still a little bit early to gauge what the infrastructure bill will actually say. If you look on the consumer side and all the plans that I've discussed today about Quantum Fiber, we don't count on anything other than RDOF. The only part of the government subsidies that are included in our plans today is RDOF. So there's possibilities for us to continue to expand our footprint. Subsidies help us move further and further from the core of our network to more rural, a little less suburban-type infrastructure. So that's a possibility. If you look at the enterprise side, there may be some opportunities for building middle mile in cybersecurity grants so it can benefit our Enterprise business. And so we'll continue to closely monitor those developments as the rules are finalized. We work with the states, which will be responsible for deploying all these funds to make sure that we're understanding their needs and we're understanding how we can deal with those. But it's still a little bit early for me to really comment on what does that mean directly for Lumen.

And on supply chain, does that pose a risk to executing your goals, the investment goals, that you have for 2022?

Supply chain poses all sorts of risk to businesses, but we're working very effectively with our suppliers to manage the supply chain issues. We've been -- for 9 months, a year, we've been giving them very advanced forecasts of our equipment needs. We've been willing to take equipment, accelerate the purchase of the equipment to make sure that we have it. It's not to say there aren't issues because there are issues that our vendors are having with chips and other things, and they'll continue to affect us and we're working closely with them. And we tend to be a large provider -- a large customer of most of our supply chain. We do not -- my network interfaces devices from 10 people or 10 companies. We pick a few and we work closely with them to make sure that we've got the clout within their organizations to prioritize Lumen. And we'll continue to work through it. I do worry about it. I do worry about it and I see some of our vendors worrying about it, but we've got great relationships and are working closely and we'll continue to work closely.

Are you ready for our rapid-fire questions?

Sure. You rapid-fire the questions, does that mean I have to rapid-fire the answers?

Three questions inside of 3 minutes. That's the goal.

Okay.

All right. So question number one, Jeff, why should investors buy your equity?

We're undervalued. We've demonstrated that with the ILEC sales and the LATAM sales, both are great businesses, but they're assets that we were not investing in. We've got incredibly strong assets in the remaining business. Our fiber infrastructure, edge computing, IP backbone, connectivity to sources of data and investing to drive growth. We expect top line growth to return in the next 2 to 3 years. We had a sustainable dividend at $1 per share. Our leverage will be neutral through the investment cycle, but we've done a great job of balance sheet management over the last 2 to 3 years. We'll continue to look at portfolio optimization, and we've done a great job of that as well. We'll continue to evaluate -- lastly, I guess, continue to evaluate opportunities to buy back our shares if it continues to be undervalued.

I guess I'd have to break into what's typically a rapid fire with the comment you just made on the buybacks. So does the capital allocation strategy you have, the accelerated fiber investments, do you still have capacity to do incremental buybacks over the next couple of years?

We think we have the flexibility to absolutely do that if it makes sense for us and if the Board decides it's a prudent investment of our money. If you look at the -- so I'll slow my rapid fire answer down. If you look at the buyback we announced in, I believe, in the second quarter, by the end of the third quarter, we have completed the $1 billion worth of buyback. We bought back 81 million shares. We reduced our dividend obligations substantially as a result of that. And we did that, we accelerated it because we do believe in the fundamental growth opportunities of Lumen and that it is undervalued certainly at that time and today undervalued for what we think the great fiber, great technology assets that we have should be worth.

Thanks. And we'll get back now to the remaining 2 rapid fires. Is inflation a net opportunity, net neutral, net risk for your business model and financial performance?

We'll watch it closely, let me start with that. We'll watch it closely. We're working with our vendors to control our own inflation within. But we worry about inflation in the overall market for our customers and what's happening with their businesses. But what we've seen historically, and this may sound counterintuitive, but if you look at my comments in 2009 and 2010, what we've seen historically is when customers go through hard times financially, that's actually an opportunity for us to introduce new technologies and take share from our competitors by delivering those solutions to customers because we increase their efficiency, their effectiveness and their performance.

Final question, since this is the AppsEconomy conference, what application can fundamentally change demand for connectivity or data consumption over the next few years?

The customers need to acquire, analyze and act on their data. So taking that as a whole is an application. We're talking about massive amounts of data, terabytes from 1 application, exabytes from data centers, and we are talking massive amounts of data as they move forward. There are more sources of that data. There are different places that they need to process that data. There are more destinations for that data to work its way to so through the hybrid workforce, through the cloud. And that drives adaptive networking, and that drives embedded security and that drives the need for IT agility in different architectures to deliver those things. By one estimate, nearly 80% of the data will be stored off-premises by 2025. That's a great opportunity for our edge because it looks like it's got the benefit of the cloud, but it looks to their customers' applications like it's on-premise. And so we'll continue to bring those applications, but it's really the overall application of needing to acquire and analyze and act on their data.

Well, Jeff, it's great to see you. Thank you for joining us today.

Well, thank you very much. I enjoyed the conversation and appreciate taking the time with us. Look forward to seeing you in person next year.