CenturyTel Q1 2010 Earnings Call Transcript

CenturyTel Q1 2010 Earnings Call Transcript
Publish date:

CenturyTel (CTL)

Q1 2010 Earnings Call

May 05, 2010 11:30 am ET


Glen Post - Chief Executive Officer, President, Director and Chairman of Executive Committee

Tony Davis - Vice President of Investor Relations

R. Ewing - Chief Financial Officer and Executive Vice President


Christopher Larsen - Piper Jaffray Companies

Christopher King - Stifel, Nicolaus & Co., Inc.

Michael McCormack - JP Morgan Chase & Co

Batya Levi - UBS Investment Bank

Michael Rollins - Citigroup Inc

Simon Flannery - Morgan Stanley

David Coleman - RBC Capital Markets Corporation

Jason Armstrong - Goldman Sachs Group Inc.

David Barden



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Good day, ladies and gentlemen, and welcome to the CenturyLink's First Quarter 2010 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Mr. Tony Davis, Vice President of Investor Relations. Mr. Davis, you may begin.

Tony Davis

Thank you, Syed. Good morning, everyone, and welcome to our call today to discuss CenturyLink's first quarter 2010 results released earlier this morning.

For those of you who have access to the Internet at this time, a slide presentation is available on CenturyLink's IR Web site at ircenturylink.com or the Investor Relations section of our corporate Web site at www.centurylink.com, which we will be reviewing during the prepared remarks portion of today's call. Unless otherwise noted in the press release, the slide presentation or in our remarks this morning, the first quarter 2010 results discussed during our call today include the effect of the Embarq acquisition completed July 1, 2009. At the conclusion of our prepared remarks today, we will open the call for Q&A.

On Slide 2, you will see the Safe Harbor language we've provided for your information. We will be making certain forward-looking statements today, particularly as they pertain to guidance for the second quarter 2010 and full year 2010, selected other information regarding 2010, the Embarq integration and the pending acquisition of Qwest and other outlooks in our business. We ask that you review our Safe Harbor language found in our press release and in our SEC filings, which describe factors that could cause our actual results to differ materially from those projected by us in our forward-looking statements.

Turning now to Slide 3. As a result of the recently announced Qwest transaction, we are required to provide the additional information on this slide disclosing matters relevant to that transaction. We ask that you review this additional information, which is also in our press release, the slide presentation, of course, and our SEC filings.

Moving now to Slide 4. We ask that you note that our earnings release issued earlier this morning and the slide presentation and remarks made during this call may contain certain non-GAAP financial measures. Reconciliations between the non-GAAP financial measures and the GAAP financial measures are available in our earnings release and on our Web site at www.centurylink.com.

Turning to Slide 5. Your host for today's call is Glen Post, Chief Executive Officer and President of CenturyLink. Joining Glen on the call today is Stewart Ewing, CenturyLink's Chief Financial Officer; and also available during the question-and-answer period of today's call is Karen Puckett, CenturyLink's Chief Operating Officer.

Our call today will be accessible for telephone replay through May 11, 2010, and accessible for webcast replay through May 24, 2010. For anyone listening to a taped or webcast replay of this call or for anyone reviewing a written transcript of today's call, please note that all information presented is current only as of May 5, 2010, and should be considered valid only as of this date regardless of the date listened to or reviewed.

As you turn to Slide 6, I'll now turn the call over to your host today, Glen Post. Glen?

Glen Post

Thank you, Tony, and thank you for joining us today as we discuss CenturyLink's first quarter 2010 operating results and selected operational updates, as well as guidance for the remainder of 2010. We're pleased with our results for the quarter as we exceeded our expectations for both revenues and earnings. We also achieved very strong high-speed Internet additions and saw significant improvement in access lines losses, especially in the urban Embarq markets.

We continue to be excited about the transaction between CenturyLink and Qwest. The transaction is truly transformative in that it creates a national industry-leading communications company with significant scale and scope. The combined company will be even more competitive with an operating presence in 37 states, with approximately 5 million broadband customers and 17 million access lines.

I'm confident the transaction will provide significant benefits for all of our shareholders, our customers and the communities that we serve. We'll have the scale and national scope to provide a compelling array of broadband product and services to our entire customer base. We expect the transaction to be immediately accretive to free cash flow per share, excluding integration costs, while strengthening the sustainability of CenturyLink's dividend by lowering the company's payout ratio. We have begun the integration process and expect to have the vast majority of all required regulatory filings completed before the end of this month. And I look forward to updating you in the months ahead, as we bring these two great companies together.

Moving to Slide 7 in the deck. We're pleased to report solid financial and operating results for the first quarter. First, operating revenues exceeded increased $1.8 billion for the quarter, which is at the top end of our previous guidance. There were several factors contributed to our strong operating revenues for the quarter. First, we experienced a significant sequential and year-over-year improvement in the rate of access line loss. We also achieved stronger-than-anticipated high-speed Internet customer additions during the quarter. Additionally, we saw an improvement in our access minutes of use trends compared to our original estimates for the quarter. And finally, we experienced a higher-than-anticipated data circuit demand from wireless providers adding capacity to their networks to handle increasing wireless data traffic.

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