Greetings and welcome to Lumen Technologies Fourth Quarter 2023 Earnings Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. As a reminder, this conference is being recorded on Tuesday, February 6th, 2024. I would now like to turn our conference over to Mike McCormack, Senior Vice President, Investor Relations. Please go ahead.

Thank you, Aaron. Good afternoon, everyone, and thank you for joining Lumen Technologies' Fourth Quarter 2023 Earnings Call. On the call today are Kate Johnson, President and Chief Executive Officer; and Chris Stansbury, Executive Vice President and Chief Financial Officer. Before we begin, I need to call your attention to our Safe Harbor statement on Slide 2 of our fourth quarter 2023 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 2, 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, which 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, which can be found on the Investor Relations section of the Lumen website. With that, I'll turn over to Kate.

Thanks, Mike. Good afternoon, everyone, and thanks for joining us today. I'm excited to provide an update on the significant progress we're making on Lumen's business transformation. A year ago, I shared that 2023 was a reset year for this company with a new mission and vision, a new executive team, and a newly redesigned culture. Importantly, we aspired to restore confidence in Lumen, not only with improved financial results but with execution excellence that delivers on our commitments. We outlined big, multiyear strategic priorities, including strengthening our balance sheet, executing our key programs to turn the core business around by 2025, and igniting new growth by delivering disruptive innovations that help our customers solve their next-gen networking needs. I'm pleased to report that we both delivered on our 2023 EBITDA and free cash flow guidance, and we made material progress on our strategic priorities. I'll start with the balance sheet. As we announced in late January, we entered into an agreement with a significant number of our creditors that clears the path for our turnaround. The deal extends most of our debt maturities to 2029 and beyond, injects $1.325 billion of net new financing into the business, and gives us access to a new approximately $1 billion revolving credit facility to support our operations. It's a strong indication of the confidence our bondholders and the broader debt markets have in our strategy, and it allows us to focus our energy on executing our business transformation. So how is the pivoted growth going? While we have a lot of work left to do, we're seeing progress, as evidenced by our North American business performance compared to other industry competitors. While two large legacy telco companies saw Q4 revenue declines in their business wireline segment of roughly 8% to 10% year-over-year, Lumen's business Q4 revenue decline was only 3.5% year-over-year. Breaking away from the others for the second straight quarter, we believe our positive peer group performance is due both to our strategy and our turnaround execution. Simply put, Lumen stands alone in how we think about the industry. In today's digital economy, technology environments are complex and multi-layered. Whether it's hybrid or multi-cloud or edge computing or emerging technologies like GenAI, businesses need fiber networks with digital services that deliver blazing fast speeds, ultra-low latency, massive capacity for growing data workloads, and proximity to widely distributed users, all in a secure environment. While our competitors harvest their business wireline segments for cash, Lumen is building a fully digital platform to deliver important new capabilities to these customers. We're tailoring our go-to-market approach to meet their needs. Let's dig a little deeper into that go-to-market execution progress. I'll start with our commercial excellence efforts in the business segment, which is all about driving better sales execution, securing our base of customers, and creating a world-class digital customer experience. In 2023, we tailored our go-to-market approach to each customer segment, allowing us to meet customers where they are and provide unique and tailored paths to our modern communication infrastructure. This year, with North America enterprise, we added over 3,000 customers and increased new logo sales by 13% sequentially in Q4. Specifically, our public sector segment grew double-digits quarter-over-quarter and year-over-year in Q4, powering our strong revenue performance. Year-over-year, we sold 29% more growth products to existing public sector customers in Q4, and we increased seller productivity by 18% for the full year. With this momentum, we expect this segment to be the first to bend the revenue curve back to growth, and we think the mid-markets segment will follow suit. Since establishing the dedicated go-to-market team for mid-markets last June, tenured direct sales productivity increased 26%, while we simultaneously grew the sales force by 15%. Importantly, we exited 2023 by outperforming market growth rates and taking share in both SASE and IP. In our Large Enterprise segment, we're winning business with sophisticated digitally native companies like Uber, who recently chose Lumen's 400-gig wave service to ensure that they can scale and accelerate their company's growth with greater agility. Now, let's turn to securing the base. This is all about installs, disconnects, renewals, migrations, and usage. This program is the most challenging part of executing Lumen's turnaround for sure, but we are making progress in mid-markets and large enterprises, shown by our sequential results for the second half. Installations were up 13%, migrations were up 4%, renewals were up 50%, and in Q4, usage was up 3%, helping us end the year strong. That said, we're just not satisfied and we will focus on improving performance here in this part of our turnaround using data and analytics in AI to determine the right action for each unique customer at the right time. The third piece of commercial excellence is all about customer experience. The Lumen operations and IT teams did a fantastic job building the digital CX foundation in 2023, redesigning our processes from order to cash, starting to implement new state-of-the-art systems, and infusing GenAI into our service delivery and assurance. While we're still in the initial stages, we're seeing signs of impact. For example, in our North American business pilot, we were able to reduce order processing time by 70% for Dedicated Internet Access, one of our highest volume products. Across all products for Large Enterprise and Public Sector customers, we're already seeing a 17-point year-over-year improvement in net promoter scores based on our process improvement work. It's important to talk about innovation, innovating for growth. As we announced last month, Dr. Satish Lakshmanan joined Lumen as our Chief Product Officer. Satish comes to us from AWS and brings a highly valuable combination of cloud, artificial intelligence, and product development experience that will be an important part of fueling our innovation engine. Just this morning, we announced that Dave Ward is joining Lumen as our Chief Technology Officer. Dave has a long history of successful executive leadership, having served as CTO for Cisco Systems and most recently as the CEO of PacketFabric, a Network-as-a-Service provider. Talented visionaries like Satish and Dave are joining because they see the potential for Lumen to innovate, disrupt the industry, and create major value for customers, and therefore, major value for investors. I'm delighted to report that we are well on our way. In 2023, Lumen co-created with customers and launched several new digital services that take advantage of our world-class fiber network. Our vision is to empower enterprises to leverage the Lumen digital platform, enabling customers to digitally consume our secured network services. This innovative platform will help customers build AI-powered applications across on-prem, colocation, and cloud environments seamlessly while also simplifying network onboarding and management to save costs. In the latter half of this year, we will share new reporting for Lumen Digital to allow you to better understand our growth trajectory. Let me highlight a few important capabilities in the Lumen digital platform. First is Network-as-a-Service (NaaS). We continue to enrich our NaaS offering with more capability, and just last week we announced the availability of two new NaaS solutions with private connections. Recently, a customer, Element Materials, remarked that Lumen's NaaS solution was not just timely but transformative; it highlighted the untapped potential of such innovative network solutions. Another breakthrough capability is ExaSwitch, our high-capacity optical switching platform originally conceived for direct inter-cloud peering. It’s performing extremely well in the market, and as Microsoft shared, they highly value the ExaSwitch platform for the fast and scalable interconnections it provides, and they're eager to expand ExaSwitch to new metros in 2024. Lumen sees ExaSwitch as the soon-to-be must-have solution for any corporation needing simplified, low latency, high-capacity direct cloud connectivity. Finally, Lumen Security. You may have read that the Department of Justice announced it had disrupted the Volt Typhoon botnet, which was used by a major Chinese government-backed effort to hack U.S. critical infrastructure. I'm incredibly proud of our Black Lotus Labs team for identifying this threat and being credited by the DOJ for helping to keep the United States safe. Soon you'll see Black Lotus Labs powering the Lumen digital platform with some highly valuable security services. The initial capabilities in the platform give Lumen access to around $40 billion in net new available market. To be clear, we're just getting started. We are bullish on the impact that Lumen Digital will have on helping pivot our company to growth. Finally, let's cover mass markets. We're executing our strategy to deploy capital where we see the greatest opportunities with the goal of continuing to evolve our business across a portfolio of markets, investing wisely, and driving fiber market penetration. Some quick notes to share about 2023 in mass markets. We delivered our commitment to grow our fiber network by more than 500,000 locations and intend to maintain that similar robust rate in 2024. While we weren't happy with our net ads performance in 2023 overall, our sales and marketing engine is gaining momentum as we close the year strongly with record-high December sales, and we continue to see this pace hold through January. Quantum Fiber is the best multi-gig product in the market, and to maintain that status, we know that constant innovation is a priority. That's why we ensured we were the first company in the industry to achieve WiFi 7 certification. Finally, Quantum Fiber customers continue to be delighted, as shown by our Q4 net promoter score of plus 64, improving both quarter-over-quarter and year-over-year customer satisfaction. One last exciting note: I've talked about rebuilding this company from the people up and how important culture change is to supporting our transformation. In just the fourth quarter alone, we won four different culture awards, most notably, US News & World Report named Lumen Technologies one of the 2024 Best Telecom Companies to Work For. Our culture is helping us attract new talent as well as supporting our current Lumen workforce through a pretty intense time for this company. To sum it up, in 2023, we made great progress pivoting Lumen for growth. We believe our strategy is the right one, and we're executing well. So our plan is to hold steady on that strategy through 2024. We'll continue to strengthen our balance sheet, drive commercial excellence to return the business to growth by 2025, and co-create innovative new capabilities that delight customers and give Lumen access to net new profit pools. We'll do all of that while keeping you apprised of our progress, being transparent about our wins and struggles, and delivering on our commitments every step of the way. With that, I'll turn the call over to Chris.

Thanks, Kate, and good afternoon, everyone. Kate spoke about our progress and how we are disrupting an industry ripe for change as Lumen transforms into the leading digital enterprise solutions provider. She also spoke of our success in reaching an agreement on an amended TSA with a broadened group of creditors to extend our debt maturities. On our Q2 earnings call, we said we viewed the formation of the creditor group as an opportunity to address a large part of the capital structure in a very efficient way, and the amended agreement we announced in January accomplishes that. The amended TSA has support from a broadened group of creditors, and when finalized, will address approximately $9 billion of outstanding indebtedness, including more than 77% of debt maturing through 2027. The TSA transactions will extend debt maturities primarily to 2029 and beyond, provide $1.325 billion of new money, and provide access to a new approximately $1 billion revolver. This agreement and the broad support for it speak to the confidence our banks and creditors have in our plan and provide Lumen ample runway to execute on our business turnaround. In short, our capital structure is no longer a limiting factor in our transformation. We expect to complete the transactions contemplated by the TSA in the first quarter, subject to the satisfaction of limited remaining closing conditions. Before covering our fourth quarter results, I'd like to take a moment to discuss some changes to our 2024 financial reporting to enhance comparability with prior periods and better align with how we manage the business. First, we're updating our business sales channel reporting by breaking out a new international and other channel, including CDN. Secondly, given the sale of substantially all of our CDN contracts during the fourth quarter of '23, we're updating our business product category reporting to move CDN from harvest to other within the international and other channel. Finally, with the sale of our EMEA business and select CDN contracts completed in the fourth quarter of '23, we updated our financial trending schedules to provide the historical contributions of these sales, as well as the associated commercial agreement impacts. Keep in mind, when these impacts are excluded from results, our sequential and year-over-year growth rates are substantially better than the reported rates. I'll now discuss the financial summary of our fourth quarter. Our fourth quarter total reported revenue declined 7.4% year-over-year to $3.517 billion. Approximately 39% of the decline was due to the impact of divestitures, commercial agreements, and CDN. Adjusted EBITDA was $1.099 billion in the fourth quarter with a 31.2% margin. Free cash flow was $50 million in the fourth quarter. In 2023, we delivered on our expectations for both adjusted EBITDA and free cash flow. Next, I'll review our detailed revenue results for the quarter on a year-over-year basis. Within our North America Enterprise channels, which is our business segment excluding wholesale and international and other, revenue declined 0.1%. This quarter, we had a public sector benefit in our other product group. Overall, North America business declined 3.5%. We again significantly outperformed our two largest historical competitors in the fourth quarter. While results can vary in any given quarter, we expect this trend of divergence between performance at Lumen and the legacy business wireline providers to continue to widen over time as we expand our digital service offerings. Large Enterprise revenue declined 3.6% in the fourth quarter. Large Enterprise revenue was impacted by lower other product revenue and also the timing of large infrastructure revenue benefiting the year-ago quarter. Our year-over-year growth rate within Grow moderated. We expect continued variability in trends as we drive towards overall stabilization. Moving on to mid-markets, revenue declined 6% year-over-year. Mid-markets is a very important channel for us, an area where we had lost considerable share prior to our focus and investment in this important area. We are leaning into this channel with products and buying tools to make ordering and provisioning more frictionless. As Kate mentioned, we're seeing improved leading indicators and are taking share in both IP and SASE products. Public Sector revenue grew 14.8% year-over-year, driven primarily by continued strength in Grow revenue, moderating declines in Nurture, and higher other revenue. Given our visibility to sales bookings and the longer install cycles related to the complexity of the solutions we're deploying within Public Sector, we have high confidence that we'll be the first sales channel to return to sustainable growth. Wholesale revenue declined 11.2% year-over-year. Approximately 39% of our revenue comes from Harvest products, which declined 15.9% year-over-year in the fourth quarter and contributed to a majority of the 11.2% decline. Our Harvest product revenue will likely continue to decline over time and is an area we will continue to manage for cash. International and other revenue declined 43.5% year-over-year, driven by the divestiture of our EMEA business and the sale of select CDN contracts in the fourth quarter of '23. Within our North America Enterprise channels, Grow products revenue increased 5.7%, driven by strength in IP across all enterprise channels, cloud services, and infrastructure product growth, particularly within colocation and dark fiber. Grow represented approximately 40% of our North America Enterprise revenue and carried an approximate 80% direct margin this quarter. Within Nurture and Harvest, we continue to expect headwinds in these categories as we take proactive steps to migrate customers to newer technologies. These actions improve our customers' experience and provide an uplift in customer lifetime value for Lumen. As Kate mentioned, we continue to see positive leading indicators that our initiatives are working, and it will take some time to be reflected in our results. Nurture products revenue declined 9.7% year-over-year. Pressure within VPN and Ethernet services drove the decline. Harvest products revenue declined 10.4% year-over-year, negatively impacted by declines in TDM-based voice and other legacy services. We have a very tactical approach to our Harvest portfolio, and we will continue to manage for cash. Other products revenue grew 31.7%. Public Sector showed particular strength in this product set. Revenue in mass markets declined 8.3% year-over-year. Our mass markets fiber broadband revenue grew 11.5%. During the quarter, fiber broadband enabled location adds were 126,000, bringing our total to approximately 3.7 million. As Kate mentioned, we intend to maintain the same 500,000 build pace this year. Turning to adjusted EBITDA. For the fourth quarter of 2023, adjusted EBITDA was $1.099 billion compared to $1.393 billion in the year-ago quarter. The fourth quarter of this year included a headwind of $13 million related to the divested EMEA business, and special items impacting adjusted EBITDA totaled $211 million. Our fourth quarter 2023 adjusted EBITDA margin was 31.2%. Capital expenditures for the fourth quarter of 2023 were $821 million, and the company generated free cash flow of $50 million in the fourth quarter. For the full year 2024, we expect adjusted EBITDA to be in the range of $4.1 billion to $4.3 billion. Our EBITDA guidance includes an expected 2% to 5% organic decline, a significant improvement from the organic decline included in our 2023 outlook as our transformation initiatives take hold. For the full year 2024, we expect total capital expenditures in the range of $2.7 billion to $2.9 billion. We expect to generate free cash flow in the range of $100 million to $300 million for the full year of 2024, which includes a $700 million tax refund expected during the first quarter of this year. We expect free cash flow to be impacted by higher interest expense related to our new TSA agreement. We will continue to provide updates as we move through the year. Before we move to Q&A, just a couple of housekeeping items. The first quarter typically has seasonally higher expenses related to bonuses and other prepaid expenses. With that, I'll turn over to Mike.

Aaron, we're ready for questions.

Operator Instructions. Our first question for today comes from the line of Simon Flannery with Morgan Stanley. Your line is live.

Great. Thank you very much, and good evening. Thanks for all the color. I was wondering if you could just help us with the updated trajectory of revenues through the quarter. I think in the past you've talked about a second half acceleration after some first half noise. You didn't really talk to that during your prepared remarks, so any updates there would be great. And then, thanks for the color on Q1 OpEx. How should we think about some of the OpEx savings from some of the severance and other actions that you've recently been taking? How does that flow through the quarters in 2024? Thank you.

Yeah, Simon, on the revenue side, we would expect the Public Sector implementation and the conversion from sales to revenue to accelerate as we move through the year. To Kate's point, we continue to see improvement in the other channels as well, but mid-markets, we expect to continue to improve over the course of the year as well. Obviously, wholesale can be a little more choppy, so that's a harder one to predict. As it relates to OpEx, most of the savings that related to the action we took last year will be realized this year, and I would expect that to be fairly even quarter-to-quarter. It's a full-year impact.

Great. And just on that Public Sector, I mean to what extent was the Q4 number including, I don't know, CPE sales or other things that may not recur next quarter?

So we did say that other product revenue impacted the fourth quarter, and that's the bulk of it. I would say that our commentary around our confidence in Public Sector really relates to the revenue recognition associated with the installs from those big deals we announced over the last 12 to 18 months.

Great. Thanks a lot.

Thanks, Simon. Next questioner.

Thanks for your question. Our next question comes from the line of Batya Levi with UBS. Your line is live.

Great. Thank you. On the enterprise trends, earlier you had mentioned that you were concerned about some of the upcoming maturities and the conversations with enterprises were kind of on hold. Can you provide more color on maybe recent conversations with some of those larger clients and how the sales funnel is shaping up? And maybe just another follow-up on the, on 1Q, can you quantify the seasonal expenses we should think about for the first quarter? And lastly, taxes, how should we think about tax range if bonus depreciation or other credits are extended? Thank you.

Thanks, Batya. I'll handle the debt one and give the other two pieces to Chris. The clarity of having this TSA updated and amended has been great for our customer conversations. It basically shifts the maturities to '29. It provides the ability to focus on our transformation efforts and have conversations with customers without that question. Our pipeline and conversations with customers are positive and growing, a lot of that has to do with the sales excellence we've put in place in terms of supporting our people with world-class platforms and driving AI for sales productivity and things like that. So I think we're in a good spot. Chris?

Yeah. And on taxes, our guidance, we gave a cash tax amount that we feel is the best way to look at it. If the one-time expenses and special charges associated with the debt transaction impact can be sensitive, that's why we chose to guide the cash tax amount. As it relates to legislation, we're really pleased with the momentum around that. We would expect that if everything was enacted, the benefit to us could be in the $300 million to $400 million range on an annual basis, but we'll have to wait and see.

All right. Thank you.

Thank you.

Thanks, Batya. Next question, please, Aaron.

Our next question comes from the line of David Barton with Bank of America. Your line is live.

Hey, guys. Thanks so much for taking the questions. I guess, two if I could. The first would be, just Chris, how you could maybe put some guardrails around how a successful TSA conclusion would impact the free cash flow guidance outlook that you're presenting here today, which does not appear to have it in there? And the second question would be, and sorry to go back to the Public Sector, but given that this is kind of the tip of the iceberg of the growth turnaround, you know, third quarter to fourth quarter it was up $30 million, third quarter to fourth quarter it was up another $50 million, most of all of that was attributed to kind of one-time items. Where, when you say it's going to be the first to return to growth, from what number should we assume that growth begins? Thank you.

I will address the last part of your question first. You're correct that we mentioned some one-time benefits over the past couple of quarters that have contributed positively. Looking ahead, we anticipate continued growth in the Public Sector as the installations related to significant contracts gain momentum. Therefore, we expect Public Sector revenue to increase moving forward. Regarding the free cash flow guidance, it includes all TSA costs, and a successful closure means we aim to finalize this in Q1. We have a clear path to achieve this, and we will provide more details once it is finalized. It's worth noting that the $700 million tax refund impact from Q1 is also included in our free cash flow guidance, which might have led to some confusion.

Right. Those are the offsetting forces. Perfect. All right. That's all helpful. Thank you, Chris.

Yeah.

Thanks, David. Next question, please.

Our next question is from the line of Michael Rollins with Citi. Michael, your line is live.

Thanks and good afternoon. A couple of questions. The first one is, if we go back to the Analyst Day slides from a few months back, the EBITDA guidance range is lower at $4.1 billion to $4.3 billion versus the $4.3 billion to $4.6 billion. Can you remind us of just some of the influences and some of the developments that got you to the current range? And then can you also give us an update on how the revenue range should look, after all this time, I think it was originally at 13.6 to 14.1 for 2024? Thanks.

Yeah. So a few things. What's changed versus Investor Day? Obviously, the EMEA sale, the CDN sale, and last but not least, just the impact of the debt discussions and that overhang in our business. Customers were concerned about the size of the '27 debt tower and our ability to execute the turnaround in time to refinance that. So we adjusted for that, and with the negotiations behind us, we see positive momentum there. As it relates to revenue, we're not guiding revenue at this point, and I would say that's conscious because the revenue piece is going to be choppy as we go forward. It's hard to predict what totals will do. It's easier to predict channel by channel when we expect to see a turnaround, but trying to give that with some level of confidence at this point is just a little too early. We've chosen to stick to EBITDA where we obviously have more levers to pull and more control around that.

And then just the second. In the past, you've talked about the opportunities to proactively churn some of the legacy revenue and convert that into the strategic revenue. Can you share maybe some additional details or developments or there are some numbers where you're able to show the financial benefit of being able to migrate customers more quickly to fresher strategic services?

So a couple of things. Number one, using AI to reach out to customers in a programmatic fashion at scale to drive productivity of the outbound calling that we do is the first step. We've made a lot of progress there, putting the platform together. Number two, taking a migration factory approach, so for each legacy platform that customers are on, understanding the behavior signals that drive likelihood to churn and approaching them in cohorts, meeting them where they are in terms of what they have and the best solution we can migrate them to, and doing as much of that in an automated fashion as possible. All of that has set the chassis we built in '23. Q4 we had significant progress, and as we gain stability and productivity, we will share more.

Thanks.

Thanks, Mike. Next questioner.

Next question is from the line of Eric Luebchow with Wells Fargo. Your line is live.

Great. Appreciate it. Maybe you could touch on mid-market a little bit. I know that's been a big focus of the company in terms of new salespeople and new logo generation. I mean, when do you think, is that more of a 2025 story when we start to see the revenue line really turn in that segment? And then secondly, maybe you could just touch on your interest in additional asset sales or divestitures as you look out, I think you've been pretty open about the consumer or mass markets business potentially making sense, being separate from the Enterprise segment. Is that something that you would actively evaluate? Thank you.

Starting with mid-markets, this is actually the first customer segment we stood up; everybody from sales, marketing, customer success, IT, operations, finance, billing, etc. All working together to understand the offerings we need, the pricing to win, and how to swarm them both direct and indirect. All of that work happened in '23. It set the tone and context for how we turn around the other segments. There's a camaraderie and healthy competition amongst my mid-markets teams, and they've shown excitement in productivity, sales, and revenue. We're targeting the ecosystem side to ensure we have a partner-friendly platform driving sales productivity indirectly.

On asset sales, we'll continue to evaluate the entire portfolio. The mass markets business is an enormously valuable asset, and that's why we're investing at the pace we're at now. That said, we've been public about saying that's a space where consolidation is necessary, and we will not be the consolidators. We'll keep our heads down, continue to focus on execution and building out the value of that asset.

All right. Thank you.

Thanks, Eric. Next questioner.

We have another question from the line of Nick Del Deo with MoffettNathanson. Your line is live.

Hey, thanks for taking my questions. I've got two guidance related ones for Chris. The first one on CapEx. So it looks like your midpoint for CapEx this year is $2.8 billion; it was about $3 billion in '23 ex-EMEA. Your fiber-to-the-home passings are about the same in '24 versus '23. So it seems like the CapEx for everything else is ticking down some. I was just wondering if you could talk a little bit about what's behind that reduction assuming that observation is correct?

It's really driven by our continued focus on efficiency. We continue to push on both OpEx and CapEx, and we're investing aggressively in both Enterprise and mass markets, alongside the broader simplification of Lumen.

Okay. So you'd say you're getting a similar bang for your or more of a CapEx bang for your buck this year than last year, and that kind of explains it?

That's right.

Okay. And then second on cash taxes, it looks like cash taxes paid excluding the refund are going to be in the $400 million to $500 million, which is a pretty big number. I guess barring any change in the tax code, is this a reasonable starting point to think about for the next few years or is probably the debt transactions or other things kind of throwing it off?

I don't want to try to estimate what '25 is right now. Obviously, we're not doing guidance there. I will give you a little bit here, though, on the interest: the cash interest in '25 will not be materially different than it is in '24. At the execution of the TSA, we do have to pull forward interest expense, so keep that in mind for your modeling.

Okay. I guess maybe I'll phrase it differently. Are there kind of one-time tax items that we should bear in mind that are baked into that guidance?

No, not materially, no.

Okay. Thank you, Chris.

Thanks, Nick. Next questioner.

Our next question is from the line of Gregory Williams from TD Cowen. Your line is live.

Great. Thanks for taking my questions. Chris, I realize you know you typically guide EBITDA in that $200 million range, and I'm just wondering if there's any particular puts and takes to consider what's driving that range this year. I know you mentioned some levers that you can pull. And then the second question is just on the ABS debt markets, if you're looking at that in the year, now that you've got the clean runway from the TSA, and maybe you can leverage some of these fiber homes? Thanks.

Yeah, we'll continue to look at the capital structure and for ways to make it more efficient moving forward. So we're not done. That was a big win, but we're not done. I am sorry, repeat the first part of the question.

Just the EBITDA range, if there's any puts and takes to consider, and levers to pull?

Yeah, no, we want to keep the $200 million range. The comment that I made earlier on just the levers we have, obviously, we're doing a number of things, right? The primary objective is to get revenue growing as we shift aggressively from legacy services to digital service offerings. We are fixing the internal workings of Lumen. As those things get fixed, that obviously gives us the opportunity to drive more efficiency, with the double benefit of revenue and efficiency plays.

That's helpful. Thank you.

Thanks, Greg. Next question, please.

We have another question from the line of Frank Louthan with Raymond James. Your line is live.

Great. Thank you. Just wanted to go to Slide 6 and the different opportunities you have there. Can you characterize that as what sort of potential revenue that is? Is that a multi-billion-dollar opportunity for Lumen? How should we think about that? And then you mentioned something on the recognition of the revenues for the Public Sector business. Is there some sort of timing difference in the cash flow of some of those that we should be aware of? Thanks.

On page six, the Lumen digital platform has a portfolio outlined with a totally digital customer experience. The four core capabilities we have right now represent a total available market of around $40 billion but may be understated because of several emerging opportunities. NaaS is cloudifying telco; it's all about digital networks, any service, anytime, anywhere. ExaSwitch is a Center of Connectivity, a fast pass into the cloud, any cloud. Security, we have significant muscle here that is currently under commercialized. We're excited about the future, and the initial capabilities will help us access net new profit pools, boosting our growth significantly.

The cash flow for the Public Sector can have a longer kind of sale to install interval due to big complex deals. Expect a 12 to 18 month lag until it starts to get recognized in revenue. The cash flow will increase as the pace of installations rise.

It's a book-to-bill difference is what you're talking about, not a cash recognition difference.

Exactly, and the contracts are massive.

Thanks, Frank. I think we have time for just one more question, Aaron.

Perfect. We have one final question here for today that is from the line of Jonathan Chaplin with New Street. Your line is live.

Thanks. Thanks for squeezing me in, guys. Actually, two very quick ones. So, Chris, given that it may make sense at some point to separate mass markets out, could you give us a sense for the EBITDA that you're generating in that business today? And then maybe a more conceptual question for you guys, as you sort of run through the trends in the business, which seem to be improving in a lot of areas, and it seems like you're taking share in the core segments that you're focused on. The business segment, in aggregate, is just fragmented, and that's part of the problem. I'm wondering if there's a consolidation opportunity there and whether you'd be a consolidator or whether a big consolidation transaction would just give you exposure to revenue streams that you're looking to move away from? Thank you.

We see huge opportunity in the business segment by providing digital services integrated into the network. We've not only the right team but also a world-class network. We have a head start with a lot of intellectual property protected by patents that positions us uniquely. That's where our focus is. If opportunities to integrate, vertically or horizontally arise, we will evaluate those as we must.

On the EBITDA for mass markets, we don't guide to that but refer you to our filings for the splits between mass markets and enterprise. We're not looking to fire sale any assets; we're focusing on investing in the good assets to make them great.

Great to hear. Thanks, guys.

Thanks, Jonathan.

Thank you.

Aaron, with that, we're going to end the call.

Thank you. Ladies and gentlemen, this will conclude the conference call for today. We thank you for your participation and ask that you please disconnect your line. Have a great day, everyone. We'll see you next time.