Financial Data and Key Metrics Changes - Total reported revenue declined 3.3% to $3,182 million, with business segment revenue down 2.6% to $2,524 million and mass market segment revenue down 5.9% to $658 million [25] - Adjusted EBITDA was $929 million with a 29.2% margin, compared to $977 million in the year-ago quarter [33] - Free cash flow was $354 million, and capital expenditures were $791 million [34] Business Line Data and Key Metrics Changes - North American enterprise channels revenue declined by 1.7%, while North American enterprise grow revenue increased 9.9% year over year [25][30] - Large enterprise revenue declined 3.7%, and mid-market revenue declined approximately 11.1% [25] - Public sector revenue grew 14.7% year over year, although it can be lumpy quarter to quarter [25] - Wholesale revenue declined approximately 3.6% year over year, with the Harvest portion contracting by 5.8% [27] Market Data and Key Metrics Changes - Fiber broadband revenue grew 22.9% year over year, representing 45% of mass markets broadband revenue [32] - The company added 101,000 fiber-enabled homes, bringing the total to approximately 4.3 million [32] - Quantum fiber penetration stood at approximately 26% [32] Company Strategy and Development Direction - The company focuses on three priorities: driving operational excellence, building the backbone for the AI economy, and cloudifying telecom [5][22] - The modernization and simplification initiatives are expected to generate at least $250 million in savings by the end of 2025 and $1 billion by the end of 2027 [7] - The company is actively constructing $8.5 billion in private connectivity fabric projects, with 57 ILA sites under construction [8][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in margin expansion and total EBITDA returning to full-year growth in 2026 [24] - The company is optimistic about the public sector's strength despite potential budget pressures [71] - Management noted that the demand for AI-driven services is increasing, positioning the company favorably in the market [56][58] Other Important Information - The company has initiated deployment of new fiber technology and is on track with project management [9] - The company is undergoing a strategic review of its consumer fiber business, focusing on enterprise connectivity [35] Q&A Session Summary Question: Context on grow revenue increase - Management indicated that grow revenue was driven by dark fiber deals, primarily from large enterprises and public sector, and expects these trends to continue [39][40] Question: Legacy TDM revenue impact - Management acknowledged some disconnect activity in the first quarter but remains optimistic about EBITDA and margin improvements [41] Question: Cloud economics differentiation - Management explained that the Lumen digital platform enables cloud economics by allowing multiple services on a single port, enhancing value without necessarily lowering prices [47][65] Question: Public sector revenue trends - Management confirmed that public sector revenue remains strong, with ongoing engagement in large-scale opportunities [62][80] Question: Pricing strategy for new services - Management emphasized that the focus is on total value of ownership rather than simply lowering prices, aiming to provide higher performance and lower latency [63][65] Question: CapEx and cash flow cadence - Management stated that CapEx will ramp up but is volatile quarter to quarter, and they are confident in the annual guidance [70] Question: Risks in public sector due to budget cuts - Management remains bullish on public sector opportunities, citing government commitments to modernization and simplification [71]

Financial Data and Key Metrics Changes - Total reported revenue declined 3.3% to $3,182 million, with business segment revenue down 2.6% to $2,524 million and mass market segment revenue down 5.9% to $658 million [25] - Adjusted EBITDA was $929 million with a 29.2% margin, compared to $977 million in the year-ago quarter [33] - Free cash flow was $354 million, with capital expenditures at $791 million [34] Business Line Data and Key Metrics Changes - North American enterprise channels saw a revenue decline of 1.7%, while North American enterprise grow revenue increased 9.9% year over year, driven by large enterprise and public sector growth [25][30] - Wholesale revenue declined approximately 3.6% year over year, with the Harvest portion contracting by 5.8% [27] - Fiber broadband revenue grew 22.9% year over year, representing 45% of mass markets broadband revenue [32] Market Data and Key Metrics Changes - Public sector revenue grew 14.7% year over year, although it can be lumpy quarter to quarter [25] - International and other revenue declined 11.3%, primarily driven by VPN declines [28] - The company added 101,000 fiber-enabled homes, bringing the total to approximately 4,300,000 as of March 31 [32] Company Strategy and Development Direction - The company focuses on three priorities: driving operational excellence, building the backbone for the AI economy, and cloudifying telecom [5][22] - The construction of $8.5 billion in private connectivity fabric projects is underway, with 57 ILA sites under construction [8][9] - The Lumen Digital platform aims to transform the customer experience and drive operational efficiency through automation and AI [13][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in margin expansion and total EBITDA returning to full-year growth in 2026 [24][35] - The company is optimistic about the demand for its services, particularly in the context of AI and digital transformation [56][57] - Management noted that while there may be uncertainty in the market, the investments in fiber and digital services are critical for long-term competitiveness [57] Other Important Information - The company refinanced $2.4 billion in term loans, reducing annual interest expense by approximately $55 million [23] - Management addressed rumors regarding the sale of the consumer fiber business, emphasizing a focus on enterprise connectivity [35] Q&A Session Summary Question: Context on grow revenue increase and sustainability - Management indicated that grow revenue was driven by dark fiber deals and expects trends to continue, although specifics on new versus existing customers were not provided [39][41] Question: Impact of legacy TDM revenue and disconnects - Management acknowledged some activity in disconnects but expressed confidence that it would not negatively impact EBITDA [40][42] Question: Differences in cloud economics versus traditional telecom - Management explained that the Lumen Digital platform enables cloud economics by allowing multiple services on one port, reducing marginal costs [46][48] Question: Public sector revenue trends and potential risks - Management noted strong performance in the public sector and ongoing engagement in large-scale opportunities, despite potential budget pressures [60][70] Question: Pricing strategy for new digital services - Management emphasized that the focus is on total value of ownership rather than discounting prices, highlighting the inherent value of their services [62][64] Question: CapEx spend cadence and public sector risks - Management refrained from providing specific quarterly guidance on CapEx but expressed confidence in annual targets, while remaining optimistic about public sector opportunities [68][70]

Financial Data and Key Metrics Changes - Total reported revenue declined 3.3% to $3,182 million, with business segment revenue down 2.6% to $2,524 million and mass market segment revenue down 5.9% to $658 million [27] - Adjusted EBITDA was $929 million with a 29.2% margin, compared to $977 million in the year-ago quarter [35] - Free cash flow was $354 million, with capital expenditures at $791 million [36] Business Line Data and Key Metrics Changes - North American enterprise channels saw a revenue decline of 1.7%, while North American enterprise grow revenue increased 9.9% year over year, driven by large enterprise and public sector growth [27][31] - Wholesale revenue declined approximately 3.6% year over year, with the Harvest portion contracting by 5.8% [29] - Fiber broadband revenue grew 22.9% year over year, representing 45% of mass markets broadband revenue [34] Market Data and Key Metrics Changes - Public sector revenue grew 14.7% year over year, although it can be lumpy quarter to quarter [28] - International and other revenue declined 11.3%, primarily due to VPN declines [30] - The North American business overall declined 2.2%, with large enterprise revenue down 3.7% and mid-market revenue down approximately 11.1% [27] Company Strategy and Development Direction - The company is focused on three priorities: driving operational excellence, building the backbone for the AI economy, and cloudifying telecom [4] - Significant progress has been made in modernizing and simplifying operations, with a goal of generating at least $250 million in savings by the end of 2025 and $1 billion by the end of 2027 [6][21] - The company is enhancing its digital platform to provide network as a service offerings, aiming to transform the customer experience and operational efficiency [13][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in margin expansion and total EBITDA returning to full-year growth in 2026, driven by increased sales and cost structure optimization [26][37] - The company is optimistic about the demand for its private connectivity fabric projects, despite some uncertainty in the market [9][60] - Management noted that the modernization efforts are essential regardless of external conditions, positioning the company for improved efficiency and customer experience [24] Other Important Information - The company refinanced $2.4 billion in term loans, reducing annual interest expense by approximately $55 million and extending loan maturity [25] - The company is proud of its consumer fiber platform but is focusing on enterprise connectivity and services, indicating a strategic review of its consumer business [37] Q&A Session Summary Question: Context on grow revenue increase and sustainability - Management indicated that grow revenue was driven by dark fiber deals and expects trends to continue, although specifics on new versus existing customers were not provided [41][42] Question: Impact of legacy TDM revenue and churn - Management acknowledged some activity in disconnects but expressed confidence that it would be neutral to positive for EBITDA [44] Question: Differences in cloud economics versus traditional telecom - Management explained that the Lumen digital platform enables cloud economics by allowing multiple services on one port, reducing marginal costs [49][50] Question: Pipeline conversion for PCF projects - Management noted active discussions with customers and an increase in demand for private connectivity fabric, although specific timelines were not provided [57][58] Question: Public sector revenue trends and potential risks - Management confirmed strong performance in the public sector and ongoing engagement in large-scale opportunities, despite potential impacts from government efficiency cuts [72][80]