Greetings, and welcome to Lumen Technologies' fourth quarter 2021 earnings Conference call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. If at any time during the conference you need to reach an operator, please press star zero. As a reminder, this conference is being recorded today, Wednesday, 9th February 2022. It is now my pleasure to turn the conference over to Mike McCormack, Senior Vice President, Investor Relations. Please go ahead. Thank you, France. Good afternoon, everyone, and thank you for joining us for the Lumen Technologies fourth quarter 2021 earnings call. Joining me in the call today are Jeff Storey, President and Chief Executive Officer, and Neel Dev, Executive Vice President and Chief Financial Officer. Before we begin, I need to call your attention to our safe harbor statement on slide two of our fourth quarter 2021 presentation, which notes that this conference call may include forward-looking statements subject to certain risks and uncertainties. All forward-looking statements should be considered in conjunction with the cautionary statements on slide two and the risk factors in our SEC filings. We will be referring to certain non-GAAP financial measures reconciled to the most comparable GAAP measures that can be found in our earnings press release. In addition, certain metrics discussed today exclude costs for special items as detailed in our earnings materials, all of which can be found on the investor relations section of the Lumen website. With that, I'll turn the call over to Jeff. Good afternoon, everyone, and thank you for joining us. 2022 brings new beginnings for Lumen. The team is energized for rapid change as we streamline our assets and aggressively invest to drive growth. I wanna be clear, our focus is on turning our top line positive with profitable revenue. Every employee in our organization, our sales team, field techs, customer care, support functions, is focused on this objective. On today's call, I'll provide a few thoughts on our fourth quarter results, an update on our announced transactions, a review of our key capital allocation priorities, and a review of our investment plans, which we believe will position the company for long-term sustainable revenue growth. Neil will discuss the fourth quarter in more detail, provide our outlook for 2022, and update expectations for the timing and financial impact of our two announced transactions. We'll reserve time after Neil's remarks for your questions. Our fourth quarter revenue trend was stable compared to the third quarter, and on an organic basis, our business revenue was unchanged from the third quarter. We said previously we do not expect a straight line to revenue growth, that our forward indicators provide us confidence that we can achieve our stated long-term goals. Quarterly sales were once again strong, and the funnel remains above pre-pandemic levels. The Lumen platform is transforming the way businesses approach their technology needs, bringing best-in-class solutions to enable fourth industrial revolution use cases and enabling the digital transformation for enterprises. Enterprises are adjusting to new hybrid workloads, and Lumen, as well as our world-class partners, are delivering the expertise necessary for our customers to succeed. As you can imagine, the excitement within Lumen is high as we position our Quantum Fiber platform for a major acceleration. Our robust, symmetric, all-digital experience is resonating with customers. Quantum will help drive revenue growth and lower the operating costs for our Mass Markets segment, improving the profitability and durability of the business. At the same time, incumbency provides us a meaningful cost advantage as we build and launch new Quantum markets and drive penetration gains. Our expectation for long-term penetration is fully supported by the strength of the product as well as the performance in our existing Quantum markets. Even in our nascent Quantum footprint, we have achieved 29% penetration with limited marketing activities, more than doubling the penetration we have in our legacy copper areas. As we pivot from micro-targeting to a market-based approach, we expect to be able to attract and retain new and existing customers to our superior product capabilities much more aggressively. The opportunity for Quantum is significant. I hope you can feel our excitement for the future of Lumen as we invest to drive enterprise and Quantum Fiber growth. Let's shift to a few quick thoughts about our previously announced transactions. These transactions allow us to focus on the areas of our business that we believe are best poised for growth. As you think about the pro forma revenue mix, over one-third of our mass market exposure to legacy voice and other revenue will be divested. Not only does our revenue mix improve, but these transactions also delivered strong valuations, supporting the view that our overall asset portfolio remains deeply discounted by the market. While we disagree with our current valuation, there's only one way to realize our true market value: execution. We get it, and we're focused on delivering. We're making good progress toward closing both deals, and Neil will provide an update on our expected timing and financial impacts. We're working to be a strong partner to both Stonepeak and Apollo as they onboard our employees and customers and as we help position them for success. Last quarter, we provided you our top five capital allocation priorities as we deploy our significant free cash flow and utilize the proceeds from these valuable transactions. I hope I've been clear that investing in growth is always our highest priority, and we will invest in both CapEx and OpEx to lay the foundation to achieve our goals. I feel we are in a great position entering 2022. Let me start with Quantum Fiber. There's a tremendous amount of activity here at Lumen as we rev up the Quantum engine. We are readying the platform to deliver on our plans and remain very confident in our opportunity to deliver the terrific experience provided by Quantum to more than 12 million locations over the coming years. Quantum Fiber revenue grew 22% year-over-year, and we look forward to the growth that will come from our much more aggressive Quantum stance. We see a long-term, significant, and sustainable revenue growth opportunity for our mass markets business resulting from our Quantum Fiber investments. As of the end of the fourth quarter, we had approximately 2.6 million enabled locations within the retained 16 states, in line with our expectation outlined last quarter. Our excitement builds as we enter 2022 with our plan to accelerate aggressively and ramp that enablement pace to over 1 million new locations, with a goal of hitting a run rate of 1.5-2 million enablements per year as we exit 2022. Our fully funded 2022 Quantum Fiber plan will enable millions of customer locations to experience our best-in-breed Quantum experience and product capability that we believe will drive higher ARPU, lower churn, and significant customer lifetime value. We will invest heavily to bring the Quantum experience to our customers, especially in the areas of product development, marketing, brand, and go-to-market sales initiatives. Both enterprise and mass market supply chains are stressed, and we continue working very closely with our diverse and valued suppliers to mitigate risk as we execute on our growth objectives. In addition, we're managing through this inflationary environment and with some exceptions, do not expect pricing pressures to impede our goals. Our excitement for Quantum Fiber is easy to understand, but we are equally excited about our enterprise business as we continue to invest aggressively in our edge compute and storage platforms, our managed service offerings, SASE, and our security products. Our customers' digital experience across our core networking services is unique and drives success with a customer-first posture. Along those lines, we have successfully launched our fully digital self-service edge compute ordering system, which allows existing and new customers to self-provision services, including bare metal and storage solutions in minutes without the need for human interaction. We believe our extensive long-haul and dense metro infrastructure and our ultra-low latency, ultra-high capacity network provide cost advantages over many of our competitors and deliver a powerful customer experience. We're seeing early signs that our customers understand that value proposition, and our recently announced $1.2 billion network services contract win for the U.S. Department of Agriculture is a great example. As part of this solution, we're delivering secure remote access, managed data, contact center, and cloud connectivity solutions to more than 10,000 USDA locations across the country and abroad. Awarded under the $50 billion Enterprise Infrastructure Solutions, or EIS program, the 11 year task order is illustrative of the broad range of products and services offered on the Lumen platform. This is a long list, but our services to the USDA include SD-WAN, MTIPS, zero trust networking, edge computing, VPN, managed security, UCaaS, voice over IP, Ethernet, and wavelengths, and related equipment and engineering services. I mentioned earlier that we had another strong sales quarter in 4Q. While the USDA deal highlights our expertise in the public sector, our other sales within North America Enterprise, which do not include public sector, were up both sequentially and year over year. In fact, December was the highest sales month we've seen in several years for this area. Beyond driving growth, we believe returning cash to shareholders is a very important part of the Lumen strategy, and that the $1 per share level is attractive and sustainable long term. As we said, our payout ratio will likely rise in the near term during the accelerated Quantum build phase, which we think should be viewed as a discrete project. The completion of the multi-year build phase, coupled with our expectation for top-line growth, should return us to more normalized payout ratios over time. We will continue to manage our balance sheet to remain relatively leverage neutral through our Quantum Fiber deployment plan, but we do expect the timeline to reach our target net leverage ratio of 2.75-3.25x adjusted EBITDA will be extended. To be clear, relatively leverage neutral is inclusive of the impact of not only the transactions, but also the CAF II to RDOF transition. We will also continue to evaluate our asset portfolio, and I hope our opportunistic but open approach to asset optimization is fully appreciated. Let me be clear, there is no urgency for us to divest additional assets, and we will only pursue opportunities that offer both a compelling valuation and a clear strategic benefit. Lastly, I want to emphasize that we continue to believe our shares are deeply discounted and do not reflect the tremendous opportunity we see for Lumen going forward. Our board remains prepared to authorize further buybacks on short notice if we believe a buyback provides the best and most prudent return for our shareholders. With that, I'll turn the call over to Neil Dev to discuss our fourth quarter results. Neil? Thank you, Jeff, and good afternoon, everyone. We entered 2022 with a clear focus on closing two significant transactions and executing on our plans to drive future growth. I will begin with our financial summary for 2021. We generated adjusted EBITDA of $8.440 billion in 2021, and on a full year basis, expanded margins by over 100 basis points year-over-year. We continue to make progress on our objective of improving revenue trajectory with fourth quarter down 0.8% sequentially. When adjusted for foreign currency and the sale of our last remaining correctional facilities business during the quarter, our sequential revenue declined 0.5% in the fourth quarter. We again delivered solid free cash flow of $3.742 billion. We returned $2.1 billion to our shareholders during the year through quarterly dividend payments in our stock repurchase program. Additionally, we reduced net debt by $1.5 billion during 2021 and exited the year with leverage at 3.6x. We also announced two significant transactions at very attractive multiples with an aggregate value of over $10 billion. Turning to revenue. In the fourth quarter, total revenue declined 5.4% on a year-over-year basis to $4.847 billion. Year-over-year metrics continued to be impacted by COVID-related demand in 2020. On a sequential basis, total revenue declined 0.8% in line with the sequential rate of decline in the third quarter. Business revenue in the fourth quarter declined 0.4% sequentially. On a year-over-year basis, revenue declined 4.7% to $3.494 billion. Normalizing for foreign currency headwinds and the sale of our correctional facilities business, sequential revenue was flat and declined 4.3% on a year-over-year basis. Within business, IDM revenue declined 0.2% sequentially and 1.5% on a year-over-year basis. On a constant currency basis, IDM grew 0.6% sequentially and declined 1% year-over-year. The year-over-year decline was due primarily to the large customer disconnect, which I have referenced on previous calls. We saw sequential benefits from compute and application services, which was driven by managed security and cloud services. Within large enterprise, in the fourth quarter, we sold the remainder of our correctional facilities communication services business. The sale of this business at the end of October impacted revenue by about $7 million in the fourth quarter, and the impact on a full quarter basis would have been about $10 million. Normalizing for the sale, large enterprise declined 0.3% sequentially and declined 5.9% on a year-over-year basis. We had strength sequentially in computer and application services driven by our IT solutions and cloud services. Year-over-year trends were impacted by the surge in COVID-related usage in 2020 and the timing of non-recurring revenues in our public sector channel. Mid-market enterprise declined 0.2% sequentially and 7.1% on a year-over-year basis, with both measures showing improvement compared to the third quarter. Wholesale revenue was essentially flat on a sequential basis and year-over-year declined 4.3% versus the 7% decline in the third quarter. Wholesale benefited from demand for fiber infrastructure and a few one-time items. We continue to manage this business for cash. Computer and application services for enterprise channels grew 3.9% sequentially, showing growth across all channels, but declined 2.2% year-over-year. The year-over-year decline is primarily driven by the previously mentioned large IDM customer disconnect. IP and data services for enterprise channels declined both sequentially and year-over-year due to fewer new VPN network deployments. We saw continued increased demand for IP in the fourth quarter as customers transitioned to SD-WAN in hybrid work environments. Fiber infrastructure services for enterprise channels declined 2.6% sequentially and 2.4% year-over-year. These products have significant professional services and equipment related to complex network deployments. The sequential and year-over-year revenue variability is driven primarily by these non-recurring services. The voice and other services, which include our legacy services, declined both sequentially and on a year-over-year basis as we manage these areas for cash. Voice comparisons continued to be impacted by higher COVID-related usage in the year ago quarter. Turning to mass markets, fourth quarter 2021 revenue declined 1.9% sequentially. Our mass markets fiber broadband revenue grew 22% year-over-year this quarter. During the quarter, we added 29,000 Quantum Fiber customers, up from 25,000 adds in the prior year fourth quarter. Turning to adjusted EBITDA. For the fourth quarter 2021, adjusted EBITDA, excluding special items, was $2.088 billion, compared to $2.188 billion in the year ago quarter. Special items this quarter totaled $19 million and were related primarily to transaction and separation activities. We continued to drive healthy EBITDA margins during the quarter, growing by about 40 basis points year-over-year to 43.1%. Capital expenditures for the fourth quarter of 2021 were $848 million. While we continue to focus on capital efficiencies, capital spending was up both sequentially and year-over-year as we increased success-based spending and invested in the accelerated Quantum Fiber build plan. We expect capital expenditures to increase going forward as our Quantum Fiber build ramps. In the fourth quarter of 2021, the company generated free cash flow of $776 million. At the beginning of each year, we evaluate our external reporting and make adjustments to better align our financial reporting with management focus and drivers of our business. In 2022, we are adjusting our mass markets product revenue reporting categories to fiber broadband, other broadband, and voice and other. The two key reasons for these changes are the increasing importance of our Quantum Fiber platform and the completion of the CAFII program. Given its relatively small impact, the RDOF subsidy revenue will be included in the voice and other category in our new reporting structure. We do not contemplate making any additional changes to our reporting at this time. Moving on to the business outlook for 2022. As we focus on portfolio rationalization in transforming the business, we will have several moving pieces that will complicate year-over-year comparability. Before I get into financial guidance, I will touch on some of those factors. First of all, as a reminder, the CAFII subsidy ended in 2021, which will impact year-over-year adjusted EBITDA by about $500 million. When combined, the two divested assets are expected to generate about $1.7 billion of EBITDA with capital spending of about $450 million in 2022. We now expect the transactions to close in early third quarter of this year. For simplicity of guidance, we have assumed first half results are included in our consolidated results. At this point, we don't expect deal close related timing variance to be material. For the full year 2022, we expect adjusted EBITDA to be in the range of $6.5 billion-$6.7 billion. When bridging to our 2022 full year adjusted EBITDA guidance, in addition to the obvious CAFII completion and divested business EBITDA, there are a few other drivers to keep in mind. As Jeff mentioned, we have significantly stepped up our investments in growth initiatives for enterprise and scaling our Quantum Fiber business. As for the divestitures, we will have separation costs and dis-synergies which will impact near-term results. As we prioritize growth initiatives and supporting our divestitures in 2022, we expect our transformation savings to be lower than prior years. For the full year 2022, we expect total capital expenditures in the range of $3.2 billion-$3.4 billion. Within that, we expect to spend about $1 billion of capital on Quantum Fiber during 2022. We expect to generate free cash flow in the range of $1.6 billion-$1.8 billion for the full year 2022. For 2022, we do not have any required contributions to the pension fund, and our free cash flow guidance does not include any discretionary contributions. As a reminder, our first quarter typically has higher working capital use, driven by timing of bonus payments and other prepaid expenses. We expect net cash interest expense in the range of $1.3 billion-$1.4 billion for 2022. As Jeff mentioned, we expect to stay leverage neutral as we close the transactions and scale our Quantum Fiber business. In terms of special items for 2022, we expect a significant ramp up in costs compared to prior years, primarily driven by dedicated third-party costs to support transition services for the divestitures. The reimbursement for these services will be in other income with no material net impact to our cash flows. In closing, 2022 is all about executing on our growth initiatives for the enterprise Lumen platform and scaling our Quantum Fiber business that fuel our return to growth. As a reminder, in addition to free cash flow generated from the business, we expect about $7 billion in discretionary cash proceeds from the transactions after the transfer of debt and transaction costs. The combination of free cash flow from the business and proceeds from portfolio rationalization efforts support our capital allocation priorities that Jeff highlighted. With that, we are ready for your questions. Thank you. If you would like to register a question, please press the one followed by the four on your telephone. You will hear a three-tone prompt to acknowledge your request. If your question has been answered and you would like to withdraw, please press the one followed by the three. Our first question is from the line of Michael Rollins of Citi. Please go ahead. Thanks, and good afternoon. As you're thinking about the opportunities in 2022 to improve revenue, with some of the priorities you mentioned earlier in the call, just curious, as you look at the charts like on page six and seven that kind of lay out the year-over-year changes in revenue versus the sequential changes in revenue, where should investors focus more in trying to think about the evolution of performance? Is the sequential much more relevant, or is the year-over-year as sometimes, you know, beginning of the year, you have price changes and other, you know, annual updates to, you know, your customers and your sales? Just separately, one housekeeping item. I think there was a mention earlier that in wholesale, there were some one-time items. I'm just curious if you can unpack the amount of those one-time items impacting the wholesale revenues. Thanks. Sure. So I'll start with the wholesale one-time. You know, in the wholesale channel, you always have carrier settlements and things like that. So there's always one-time, but just stepping back roughly, you know, $10-$15 million more than what we typically see. So that's wholesale. In terms of your question on sequential versus year-over-year, in 2020, obviously we had a fair amount of revenue driven by COVID in our legacy services. So going forward, I think sequential and both sequential and year-over-year are gonna become more meaningful. Having said that, as you highlighted, fourth quarter, we always tend to have, you know, some large rebates, et cetera, nothing specific to highlight, but that's generally when we have some contract rebate pressure, et cetera, and fourth quarter tends to be seasonally strong. We'll have a little bit of that seasonality. Other than that, nothing specific to call out. The other thing I'll highlight is, Jeff touched on that in his remarks, is as we close the transactions, the mix will significantly improve. There is a fair amount of voice and other legacy revenues that move with the transaction, so that will be a positive impact, in terms of the mix going forward. Thanks. Thanks, Michael. Grant, next question. Our next question is from Eric Lutsko with Wells Fargo. Please go ahead. Hey, thanks for taking the question. Quickly, I just wanted to talk about, you know, the capital allocation priorities. Obviously, your dividend coverage on free cash flow is tightening this year as you ramp up fiber spending. You know, beyond this year, as you ramp that up even more, wondering if that will even be fully covered, and if it's not, how should we think about the split between, you know, one-time fiber expansion CapEx versus, you know, recurring capital intensity in the business and how we should think about that through the investment cycle? Then, second, I just wanted to get a sense, Neil, if you could help size up some of the, you know, cost synergies. I think if you take out the $500 million of CapEx and the divested assets, the half year contribution, you get to about $7 billion of EBITDA, and your guide is for about $400 million decline from that level for the full year. Just wondering how we should think about how those impact the outlook for the full year. Thank you. Sure. Eric, I'll take the first part and then let Neil take the second question. You know, as we look at the dividend and the payout ratio, and I've said this before, we think that the dividend is an important part of our shareholder value proposition. We think the dollar per share is attractive to investors, and it's sustainable. We're very comfortable with the dividend there. I've also said that in 2022, in the next few years, we are going to be investing in growth. You mentioned Quantum Fiber, and with the Quantum Fiber build, we think that should be viewed as a discrete project that starts already and ends in a few years as we complete the 12 million enablements that we expect over the coming years. We also expect to return to top line revenue growth. With those two things, while we do see the payout ratio rising in the near term, with those two things, we think that it will return to more normal levels over time. Eric, on your question on these interviews, I think just to step back a little bit, and if you think about the transaction EBITDA, those are deal basis EBITDA, if you will. We have allocated costs for shared function, et cetera. It's a little bit of a moving target in terms of we know what they are gonna be, but we're already working on right sizing those costs, and we'll continue to do so, as we go forward. The other thing I mentioned is that there's also a little bit of an opportunity cost in 2022. As we focus on the separation of the business and as we focus on all the investments for growth, just think about our IT resources. We are not focused as much on transformation, and so our savings will be a little lighter. We factored all of that into the guidance. The savings don't go away, and so we'll continue to focus on our transformation savings, and we'll be able to, you know, continue to focus on driving those costs out of the business. All right. Thanks, guys. Thanks, Eric. Fran, next question. Our next question is from Simon Flannery with Morgan Stanley. Please go ahead. Great. Thank you. Good evening. Good to hear on the Quantum Fiber revenue growth and the build plans. I guess on the build plans, should we think about you're doing, I think you did 400,000 this year. Should we think about the 1 million this year as being fairly linear, or will that is it still very much second half loaded, I guess, to get to that 1.5 million-2 million? I guess the question is why not go faster? We've obviously seen the infrastructure bill award a lot of funding. We've seen fixed wireless gain some traction here. If you see the opportunity here, you've got obviously a lot of homes with potential. What's keeping you from accelerating that pace? Neil, just one on taxes. I saw you highlighting, I think, $100 million of cash taxes. What should we be thinking about run rate cash taxes once the transactions are complete, in terms of the ongoing, as a sort of a full taxpayer? Does that go up $a few hundred million, as we get out of 2022 into 2023? Thanks. Simon, on the build plan for Quantum Fiber, it's not going to be linear. It takes a while to ramp these capabilities, to do the engineering, to make sure that we've got the construction resources in place. It's not going to be linear, but it's not going to be fully back-end loaded either. We're already at a pace of, you know, call it 500,000 homes, 400,000, 500,000 homes and business locations. You know, there's gonna be that as a starting point, but we'll get to the full 1 million toward the end of the year, obviously. It's a little back-end loaded, but not substantially. What keeps us from going faster? This is hard work. There's a lot of things to do. We wanna make sure that we do it right. We're exceptionally good at building networks, and we will continue to do that, with the Quantum Fiber build. There's hard work. We also have supply chain challenges, and I mentioned that in the prepared remarks. I don't wanna overemphasize it, but it's an issue, and we see it with equipment vendors and their chips and them getting access to chips. We'll continue to manage that, but that's also a constraining factor on how to accelerate faster. Now, the main point is we wanna accelerate to a point of 1.5 million-2 million homes by the end of the year. We wanna be on that run rate finishing the year and going into 2023. That's really a large effort to make sure that we do go as fast as we possibly can. Neil, do you wanna take the cash taxes? Yeah. Simon, on cash taxes, as we've mentioned before, we'll use up most of the substantial part of the annual NOLs this year, a combination of our operating income and the transactions. You can see that $100 million that we guided to this year is fairly close to what it has been in the past. Going forward, a good assumption is our, you know, cash taxes will be fairly close to our GAAP taxes. At this point, the 26% effective rate is probably a pretty good assumption. Great. Thanks a lot. Thanks, Simon. Next question, Fran. Our next question is from Phil Cusick with J.P. Morgan. Please go ahead. Hi, guys. Forgive me if we just sort of go back to this, but I wanted to talk about the sort of CapEx pace and that acceleration into the back half. You've talked in the past about other projects, like network transformation, that wouldn't need to be done this year as an offset. I wanted to sort of quantify what that reduction might be as we think about the growth in fiber spending this year and the pace that we're gonna exit as we start to think about 2023 CapEx. Can you help us with that? Thanks. Yeah. Let me take a first pass at it, and then let Neil add to it. I don't wanna get into discrete projects that we're funding and not funding, but let me give you a sense of the CapEx and what we fund. There is a certain amount of capital that we call, you know, just ongoing operational capital, keep the lights on type stuff. But the majority of our capital funding is success-based or project-based. The project-based things that we've talked about in 2021, we spent a lot of money on edge computing, building a coverage model for edge computing. We finished the year with more than 95% of our U.S. enterprises within 5 ms of our footprint. We're not going to spend that money again next year. Now, what I hope we do, or this year in 2022, what I hope we do is continue to densify the equipment in those locations, because that means we're being successful in selling our products and services. We spend a substantial amount of money on that success-based stuff. Quantum Fiber, we spent money to enable 400,000 homes in 2021. We will spend money to enable 1 million homes and get to the run rate that I talked about in answering Simon's question. We'll continue to spend on that project and really focus there. Beyond that, we manage projects in and out. We're not starving anything to do those activities. We are investing heavily in growth, and I say that on CapEx. I also say it on OpEx. We're investing heavily in growth on OpEx to make sure that we have the product capabilities, to make sure that we have the go-to-market strategy, the brand awareness, all of the things that go into effective selling. With the results in the fourth quarter, we're seeing all of that continuing to benefit the company. Neil? Yeah. Just to underline the point that Yeah, if I could follow up. Sorry. No, Phil. Sorry. Just to underline the point that Jeff made. We're not constraining anything. I mentioned in my prepared remarks that we have about $1 billion for Quantum Fiber in the capital guidance that we provided. To the extent that we can scale faster, if you look at the combination of our free cash flow and deal proceeds, we can easily ramp up more spending for Quantum Fiber. That won't be the constraint. The constraint really is gonna be mundane things like permitting, construction, getting it built, and those are the things that we're focused on scaling. If we can scale those things, and that means we end up spending more, I think we'll lean into it. Just one other follow-up comment, Phil, and then you can ask your follow-up question, Chad. In the meantime, we're focused on our existing 2.6 million enablements that we have in driving penetration in those. You know, we're at around 29% penetration, but that includes homes that we just turned up last month. We wanna make sure that we continue to focus on driving the penetration in the existing footprint. Thanks. If I can just follow quickly, and again, I'm trying to think of the exit run rate this year. You've talked about the exit run rate in builds, but also I'm thinking about CapEx. I mean, it seems like there could be another $700-$1 billion of CapEx next year in fiber, in Quantum. Are there other projects that are still happening this year that we could think about sort of dropping away? Or should we think about next year being sort of the peak of CapEx on Quantum? Phil, I think the key point there is, you know, our plan, like Jeff said, on capital is dynamic, so it's not the same priorities that we support every year. For example, on Edge, a lot of the investments we made, the step function investments, I would say, were more in 2020. This year it's more success based at lower, much lower intensity. Without getting into specifics around 2023, I think you're right, Quantum will ramp up. We do view that as a discrete project, but the rest of the plan will be dynamic and will be success based. Good. Thanks, Phil. Thanks, Phil. Can I ask the next question? Our next question is from David Barden with Bank of America. Please go ahead. Hey, guys. Thanks so much for taking the questions. I guess the first one would be, Neil, if you could kinda give us any color about the revenue that we need to be taking out of the model when we're thinking about the second half of the year, alongside, you know, some of the stuff you've shared on the EBITDA, the cash flow side. The second question I guess, Jeff, is, you know, if we take that $17 and then subtract that from the free cash flow guidance, you know, it says that the kinda second half of the year, you know, the dividend's barely covered, maybe a little covered. You talked about buybacks being in the mix with the board. I was wondering if you could kind of elaborate on that a little bit, but where that money would come from. Would you lever up to buy back stock if it got to that point? That'd be helpful. Thank you. Let me do the second question first. I'm not gonna, you know. Sorry, this is gonna be an unfulfilling answer, David. I'm not going to speculate on what the board might decide and how we might decide to do it. I am very clear, I hope I'm very clear on the priorities for our capital allocation and the first one being investing in growth. You know, as we look at the CapEx, we are very committed to investing in Quantum Fiber. We are very committed in investing in SASE and IT solutions and edge computing and those types of things, where we think that significant growth can come from over the next few years. Secondly, we've talked about the dividend, and we wanna maintain the dividend. I will point out that our last buyback reduced our dividend obligation by about $81 million a year. That's not exclusive issue to just the dividend. That also is factored in by the buybacks. We wanna maintain relatively leverage neutral, meaning roughly where we are, maybe not exactly where we are, but roughly where we are. If we think it's appropriate, we will come up with a plan to make additional buybacks. I'm not gonna speculate on what that plan would be or how the board would view it. I just want you to know that we are open to that. On your first question, David, we don't provide revenue guidance, so I'm not gonna get into providing revenue guidance for divested assets. Like I said, on EBITDA, our expectation is $1.7 billion, and our guidance assumes that we have half year's worth of EBITDA in our consolidated results. One other point. We're getting $10.2 billion for the two transactions that we're doing. There are other sources of funds. Got it. If I could just maybe just one quick follow-up, Neil. Based on kind of some of the revenue mix benefits that you've talked about getting out of this thing, would it be fair to say that the margin on this portfolio, the Apollo portfolio in particular, it is gonna be a higher margin portfolio, than kind of the business that you'll have which you're investing to grow? Yes, you're right. It's a higher EBITDA margin business. Generally, our legacy revenues are higher margin. Yeah, post the transactions, you'll see a dip in our EBITDA margin, which also means we'll have more opportunity to expand margins going forward. We also expect Quantum Fiber to be successful. If you look at the markets that we retain, we have a couple of things going for us. Most of those big markets are growing markets. More people are moving to them. They're higher tech markets. You know, that we see a lot of opportunity in those states, and we have incumbency. Incumbency helps us sell, it helps us build at a lower cost, helps us operate, and we're moving to the all digital experience that those customers have. You know, we expect good things from our Quantum business. All right. Thanks, guys. Appreciate it. Thanks, David. Brad, next question. Our next question is from Batya Levy with UBS. Please go ahead. Great. Thank you. Can you provide more color and maybe quantify the planned investment for growth specific for this year that could come off next year, and how we should think about the pacing through the year? The second question on subsidies. With CAF gone, can you just remind us how much subsidy dollars are left in the model? I think you applied for $200 million in subsidies to replace some foreign equipment in the network. To the extent that you get that approved, how would you account for it? Does the guidance include it? Thank you. There's a lot packed in there, Batya. What Quantum Fiber investments are we going to make in 2022 that could come off in 2023? We're not giving guidance for 2023. We do plan to ramp our Quantum Fiber investments. We've said that. We said that our plan for the year in 2022 is 1 million homes, and that we plan to do 1.5 million-2 million at a run rate basis by the end of the year. We're not giving forward-looking guidance, but we have given you an indication of what we expect and how we expect to build. Neil, I'll let you take the question on how do we account for $200 million. Yeah. On the I think your other question was CAFII to RDOF. Obviously, CAFII is roughly, you know, $500 million. RDOF is about $26 million a year. Just keep in mind, significant part of that will move with the divested assets. So it's not gonna be that material going forward. In terms of the equipment reimbursement, we're still working through the details on that. So, you know, that's probably too premature to comment on that. Just one quick follow-up on the investment. I appreciate the CapEx part, but in terms of the OpEx part that could hit this year, is there any way you could provide some color around that? Yeah. That's all incorporated into our, you know, EBITDA guidance. You know, I think it'll start to ramp a little bit and not gonna be materially different quarter-over-quarter, maybe a little higher in the second half of the year. The whole reason we're making those investments, like Jeff mentioned, is improved revenue and EBITDA and trajectory in the outer years, and we're confident of that. Okay. Thank you. Thanks, Batya. Brad, next question, please. Our next question is from Nick Deldeo with MoffettNathanson. Please go ahead. Hey, thanks for taking my questions. One for Jeff and one for Neil. You know, Jeff, on the supply chain, you said it's an issue, but you didn't wanna overstate it. I guess as we think about your 1.5-2 million passings target in the coming years, is that predicated on the supply chain situation improving, or is that achievable if things stay stressed? I guess more generally, what's your outlook on the supply chain? Then for Neil, I was wondering if you could help us better understand what, you know, relatively means in the context of staying relatively leverage neutral. You know, are you talking about a quarter turn, a half turn? You know, what sort of bound should we think about? Let me take the first one, Nick. On supply chain, what's my general attitude towards supply chain? We are monitoring closely, and we have vendors on the enterprise side and vendors on the consumer side, the mass market side, and vendors on the fiber side, where we are continuing to work closely with them and put in mitigation plans in the event that they're unable to deliver for us. But we see it on all fronts of the business. Again, by focusing on this, I don't wanna overstate the issue, but it's something that we're really paying attention to and working with vendors. Months ago, we put in full year orders, nine-month orders, for our vendors and making sure that we were in the queue early and often to ensure that we got equipment and that we get the resources that we need. We're starting to see some companies hold off on taking new orders. As we see that, then we're working to put in our mitigation plans to make sure. It's factored in to our build plan, but it is an issue that I will highlight as a real one that we have to mitigate. Neil? On the leverage, Nick, if you look at 2020, we were at about roughly around 3.6. 2021, we exited about 3.6. We paid down about $6 billion of debt since we announced our de-leveraging plan, $7 billion since the close of the Level three transaction. The key point is, I think we've been pretty good about calibrating our leverage to the business profile. Even though we're divesting a fair amount of legacy revenues, we haven't really levered up. If you think about Quantum Fiber, that's, you know, gonna be a high growth business and infrastructure business. You always have to think about de-averaging our leverage and think about whether that's appropriate going forward. Our view right now is the 3.6 is probably a good assumption. Now we have said that it'll be roughly in that ZIP code. Any quarter-over-quarter, you might see some fluctuations. Until the business profile changes significantly, we don't see the need to change that at this point. Like Jeff has mentioned several times, we're going through an investment cycle, and it truly is a discrete project. It is, you know, upgrading our copper network to fiber, and it's a long life asset. As we do that, we're okay with the leverage fluctuating a little bit as we fund that build. Okay. Thank you both. Thanks, Nick. Next question, France. The next question is from Greg Williams with Cowen. Please go ahead. Great. Thanks for taking my questions. First one is just on rising rates. I mean, you have a couple commitments here, the fiber to the home builds and staying leverage neutral through the build and the dividend. How should we think about your priorities if it's changing your cap allocation and your balance sheet amid you know escalating rate environment? Second question is just on the penetration goals for your fiber to the home plans. I see you're at 29%, and you noted it's you know nascent markets and unlimited marketing. You know, as you ramp up that marketing engine, what are your longer term penetration targets or terminal penetration targets as we just think about you know your revenue inflection and free cash flow growth in the outer years? Thanks. Okay. Rising rates, Neil, I'll let you take. Penetration, I'll take. I'm sorry, Greg, the third one was? Just the penetration, you know, as I think about the revenue inflection in your outer year free cash flow. Okay. Well, first of all, we are always focused on free cash flow. We think that is the primary driver of business success, and free cash flow is sustainable long-term free cash flow growth is what we're after. That's why we're investing today. That's why we're divesting the properties that we're divesting because we weren't willing to invest to the level that we think they can tolerate. It's why we're investing in the 16 retained states. It's why we're investing in our growth initiatives on the enterprise side. It's why we've invested in our relationship with the federal government. It's all. It's why we're investing to drive long-term sustainable free cash flow. Penetration for Quantum Fiber, you know, we're at 29%, but that's always going to be a blended average of new homes, new business locations for mass markets that we've just added with ones that we've been marketing at for a while. We expect when we reach steady state that it'll be north of 40%. Every indicator is there supporting it. If you look at the quality of the product that we have, you know, we have a very effective, competitive product. Even with the limited marketing, we're doubling our penetration rates in our traditional copper areas. You know, the symmetrical nature of our product is far better for work from anywhere environment, and the capacity needs continue to expand for consumers just like they are for businesses and business customers. With the abundance of streaming providers and the bundling of video is becoming less relevant. We see lots of factors in addition to our all digital world-class experience that we're offering to customers, our great NPS scores. We see a lot of factors that give us high confidence in the 40%+ numbers. Neil, on the rising rates? Yeah. Couple of points. One, about 80% of our debt is fixed. If you combine that with the fact that we refinanced about, you know, $20+ billion in the last three years and the fact that we're gonna be paying down a significant amount of debt, and you look at our maturity profile, we have, you know, very minimal needs in terms of tapping the market. I think we're very well positioned in terms of our balance sheet to negotiate a rising rate environment. Great. Thank you. Thank you, Doug. Operator, next question. Our next question is from Frank Louthan with Raymond James. Please go ahead. Great. Thank you. I wanted to ask about the longer-term top line growth. I want to take Quantum Fiber out of it. You've set some aggressive goals there. That's a great opportunity. I'm sure you'll be able to show the growth. Post these deals, you have close to 80% of your revenue from the enterprise side, which has struggled for many years to show a top line growth for a 12 month period. What's going to change or what are you going to be doing differently over the next 2- 3 years to hit the overall top line growth goal that'll really affect meaningful change in that business? Well, it's all the things that I've talked about today and some before. Edge computing, 97% of U.S. enterprises are within five milliseconds of our network. That makes machine-to-machine control possible for our customers. That would make AI applications and machine learning applications a real possibility for our customers as they enter into the fourth industrial revolution and their ability to acquire, analyze, and act on their data. It's things like SASE. We'll continue to move SASE, which is secure access service edge. It's software-defined networking at the customer premise for connectivity and security capabilities. It's things like dynamic connections, which is really network as a service. That's more of an enabling technology, but it enables our customers to use their network that they buy from us to connect to cloud, a variety of cloud service providers. It's orchestration of those capabilities and making it easier and more manageable for customers to maintain their connectivity in very complex environment. It's helping them do that with our IT solutions capabilities. I, you know, it's kind of a host of things that we're launching and really showing success in. That network proximity has been the case for a while. Are you saying there are new sales people you're hiring or a significant number of new products that you're bringing to market that are you're ahead of your competitors? I mean, again, what's sort of different about this opportunity with these new products that's gonna change versus the last several years? Well, all of the above, but the fundamental nature of the products are different. There's nobody else out there. You say network proximity has been there for a while. It's been there for a while for us, but there's nobody else out there that has the network proximity of edge computing facilities within, you know, a few milliseconds of the customers. Those are different capabilities. There's nobody out there that's really been able to provide network as a service or integrate security into access solutions. We'll continue to focus on that. I argue there's nobody better in helping people build and manage networks and orchestrate their connectivity needs than Lumen. We'll continue to differentiate. I'd also throw in the all-digital experience. You know, our Lumen platform brings the world's best partners to our customers for different types of applications, whether it's T-Mobile for wireless or VMware for virtual machines. You know, we have partnered, and I always feel bad when I start listing partners ad hoc because we got some great ones, and I don't want to leave anybody out, but I'm not gonna go through an exhaustive list. But we've got great partners bringing those capabilities. I think it's the total package of solutions, and I don't think you're right in thinking that there are other people out there that have all those capabilities. Thanks, Frank. Okay. Thank you very much. Frank, we have time for just one more. Very good. Our last question will be from the line of Tim Horan with Oppenheimer. Please go ahead. Thanks, guys. The Edge Compute product, can you talk about maybe some new use cases? Because I guess a lot of what we're predicating on the growth here is for kind of new use cases and uniqueness of the infrastructure. Any color of what you're seeing out there now would be great. Yeah, we're seeing a lot of different use cases. First of all, storage. You know, edge computing and storage capabilities are very important. They wanna store their data, or customers wanna store their data close to their in-house network compute resources, but they don't wanna have to store it within their own facilities. They want the benefit of the cloud and the proximity of their own data center. That's what our Edge does. We see retail customers that are exploring how can they take all their video feeds, all their camera feeds from their store and process those for watching for shoplifting or looking at shelf restocking. You know, how can they take all of that information and utilize it? They don't want to haul that traffic thousands of miles to some remote compute resource. They also don't wanna build a data center in every one of their stores, so they come to us and looking for us to help them build compute resources to take an entire market, aggregate it within very quick connectivity and very short hauling across the country and so forth. You know, those are some of the use cases. If you think about the fourth industrial revolution, I already said this, but the amount of data is exploding. I mean, it's just exploding, and the applications to use that data is exploding. Our customers want to acquire that data, they want to analyze that data, and they wanna be able to act on that data quickly and effectively. That's what our edge compute applications are all about, is helping them do that. We're starting with bare metal. We've moved into storage solutions. We'll continue to augment with the virtual machines and all sorts of other edge computing capabilities. We'll layer on top of that orchestration so that our customers can manage the hybrid cloud environment that they have, and really be effective in managing their IT environment, and be really agile in their response to IT changes. Hope that helps, Tim. Thank you. On the fiber side, 12 million homes, what percentage of your homes will that be? Does the infrastructure bill enable you maybe to, you know, expand that or help get some subsidies in there for that 12 million homes? Yeah. Tim, too early on the infrastructure bill. The 12 million, I think, it's about 21 million we have post the transaction. The 12 gets to kind of the large urban areas. That doesn't mean that's the total opportunity. As we continue to build out, we'll continue to evaluate the footprint and we also look at different technology solutions to kind of reduce the build cost. We'll continue to evaluate that aspect of it as well. Thanks. Thanks. Let me wrap up. You know, I hope that you all on the call today get a sense of the excitement that we have here at Lumen. We're poised for growth and expect our investments in the business to not only give strong growth in revenue and earnings, but also deliver value creation for our stakeholders. We're excited about what we're doing. We see progress in our results, and we appreciate all of your interest in Lumen. With that, I'll end the call. Thank you all for joining today. We would like to thank everyone for your participation and for using the Lumen conferencing service today. This does conclude the Conference Call. We ask that you please disconnect your lines. Have a great day, everyone.