Tony Davis - VP, Investor Relations Glen Post - President and CEO Stewart Ewing - Executive Vice President and CFO Bill Cheek - President, Wholesale Operations Karen Puckett - Executive Vice President and COO Jeff Von Deylen - President, Savvis

David Barden - Bank of America Batya Levi - UBS Frank Louthan - Raymond James John Mark Warren - Morgan Stanley Michael Adele - Morningstar Stanley Martinez - Legal & General Michael McCormack - Nomura Phil Cusick - J.P. Morgan

Thank you, Saeed. Good afternoon, everyone, and welcome to our call today to discuss CenturyLink's first quarter 2013 results released earlier this afternoon.

The slide presentation we will be reviewing during the prepared remarks portion of today's call is available in the Investor Relations section of our corporate website at ir.centurylink.com. At the conclusion of our prepared remarks today, we will open the call for Q&A.

On slide two, you will find our Safe Harbor language. We will be making certain forward-looking statements today, particularly as they pertain to guidance for second quarter and full year 2013, the integration of Qwest and Savvis and other outlooks in our business.

We ask that you review our disclosure found on this slide as well as 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 and our forward-looking statements. We ask that you also note that our earnings release issued earlier this afternoon and the slide presentation and remarks made during this call 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 website at www.centurylink.com. Now turning to slide three, your host for today's call is Glen Post, Chief Executive Officer and President of CenturyLink.

Joining Glen will be Stewart Ewing, CenturyLink's Chief Financial Officer; and also available during the question-and-answer period of today's call will be Karen Puckett, CenturyLink's Chief Operating Officer; Bill Cheek, President of Wholesale Operations, and Jeff Von Deylen, President of Savvis. Our call today will be available for telephone replay through May 15, 2013, and accessible by webcast through May 29, 2013.

Anyone listening to a taped or webcast replay or reading a written transcript of this call, should note that all information presented is current only as of today, May 8, 2013 and should be considered valid only as of this date regardless of the date heard or viewed. As we move to slide four, I’ll now turn the call over to your host today, Glen Post.

Glen?

Thank you, Tony. Good afternoon, everyone.

Thank you for joining us today to discuss CenturyLink’s first quarter 2013 results. We will also provide guidance for second quarter and update full year 2013 guidance, as well as other important updates about our business.

We are pleased with our first quarter results and we continue to make good progress on a number of fronts. Starting on slides five, I’d like to begin with some highlights from the quarter.

We continue to generate solid operating results from subscriber metrics. Our annual rate of access line loss improved to only 5.7% in the first quarter 2013 from 6.4% a year ago.

Also we achieved better than expected broadband net ads of 66,700 in the quarter. This is obviously strong performance for the quarter.

However, we do expect broadband subscriber growth to be significantly lower in the second quarter due to normal seasonality in our industry. During the quarter, we added 13,400 Prism TV customers ending the period with 120,000 subscribers.

We also believe video is an important product for our residential customers and we continue to rollout the service to new markets. From a business markets perspective, we experienced strong new sales to business customers across the company for network and hosting services in the quarter.

Our business strategic revenue grew over 6% in the first quarter 2013 compared to the same period a year ago, and we continue to see high demand for Ethernet and DSL and Wavelength services as they grew over 15% year-over-year. In early January we announced and implemented an organizational realignment that merge our entire retail consumer and business network services operations in to a single operating group led by our Chief Operating Officer, Karen Puckett.

The key objective in this realignment was to ensure that we provided a more consistent go-to-market strategy and an improved end-to-end service deliver experience to business customers both in and out of region. During the first quarter 2013, cash expenses declined 3% from the same period a year ago driven by lower personnel related costs, partially offset by higher colocation, managed hosting and network expenses.

Finally, I’m pleased with the strong progress we made on the share repurchase program we announced in February. Through May 2013 we repurchased 19.2 million shares, a 3% of our outstanding common stock for a total of $682 million.

We repurchased shares aggressively over past few months and we expect to opportunistically buy stock going forward. We do expect to complete the $2 billion repurchase by February of 2015.

If you turn to slide 6, I’ll provide an update on our key strategic initiatives starting with broadband expansion enhancement. We continue to make significant investments in this area, with a 67,000 high-speed internet customers added in the first quarter, we now serve more than 5.91 million broadband subscribers.

Also as a result of our network investment and enhancement broadband speed availability is continue to improve, over 70% of enabled access lines received speeds of 6 megabits of higher, over 60% of enabled lines received 10 megabits or higher, 30% -- 32% have high -- have speeds of 20 megabits or higher and nearly 15% has speed of 40 megabits or higher. As part of our broadband initiative, we are also focused on expanding our Ethernet and MPLS services for our business customers.

During the quarter, we continued to expand our Ethernet over Copper footprint more than 3,300 of our central offices are now capable of providing Ethernet in our network. We expect to continue making investments in our network to enhance speed capabilities require to deliver competitive broadband products and services across our markets.

We recently announced the launch of 1 gigabit service pilot in Omaha, which will reach approximately 48,000 addressable homes and project is completed in the fourth quarter of this year. We will carefully evaluate the success of this pilot before determining further deployment this advanced technology.

We will be considering such factors as positive community support competitive compared to the marketplace. Our return to investment in these areas among other key factors help us make decisions regarding future investments in fiber to the power technology.

Turning to slide seven, our Prism TV service continues to perform well and represents a very compelling entertainment alternative to cable TV service and the markets where we offer the service. We added 13,400 Prism TV subscribers during the first quarter for a total of 120,000 subscribers.

We now have a penetration of nearly 10% across the market where service is available. Over 50% of the customers added were new customers to CenturyLink.

These customers continue to have a high rate of broadband attachment I believe about 94% attachment rate in the first quarter of the year. In addition, we continue to enhance our IPTV features by introducing new functionality and applications, including expansion of our TV Everywhere capabilities, our video-on-demand library and our recent successful trial of wireless set-top boxes.

We expect to continue to expand our Prism TV footprint as well as drive additional subscriber growth. As announced last quarter, Phoenix was the first legacy Qwest market to receive Prism TV service.

Everybody sales there are favorable. In the first quarter we also soft launched the service in Colorado Springs, and while we previously indicated we expect to launch Phoenix plus one additional market this year, we now also expect soft launch Prism TV service in Omaha during the second quarter with our fiber to the prim technology offering there.

Continuing on to slide eight, there are two strategic, initiatives investing fiber builds of new towers in our service areas is economically feasible. During the first quarter we completed approximately 800 fiber to the tower builds for a total of over 15,500 across our footprint.

We currently expect to complete a total of 4000 to 5000 builds by end of 2013. We believe our fiber-to-the-tower program have solidified our wholesale access revenue for the long term and assist in the stabilization of our revenue trends.

As we have discussed with you before, we are experiencing some revenue compression as our wireless wholesale customers transition from copper based DS1 facilities to Fiber-based Ethernet services. However, we anticipate that wireless bandwidth growth will result in expansion of Ethernet consumption reversing the current revenue compression by early 2014.

On average, bandwidth capacity of initial fiber-based connections is increasing which mitigate some of the transition revenue compression we had expected. Now moving to slide 9, in managed hosting and cloud services, we saw some weakness in first quarter data hosting revenue growth due to soft third quarter 2012 new sales, also due to foreign exchange currency impacts as well as the impact of declining computing storage costs.

However we continue to believe we are well-positioned to capitalize on long term secular growth opportunities in this space. We have developed and are expanding our strong product offering for businesses of all sizes.

We continue to build upon solid momentum in the fourth quarter 2012 as new sales were also strong again this quarter. Cross-sell opportunities for hosting product across the company continue to be strong.

The sales of hosting services to business network customers steadily are growing. With our savvisdirect, we’ve updated our bundled solutions to introduce cloud product to additional business customers throughout all of our sales channels.

We also continue to invest to increase data center capacity as well as expand our product portfolio to meet customer needs and expand our market opportunity. In the first quarter we expanded capacity in three data centers adding approximately 15,000 square feet of saleable floor space.

For full year 2013 we expect to add to a total of nearly 90,000 saleable square feet. In April, Savvis is recognized as a leader in Gartner's Magic Quadrant for managed hosting North America, and we believe another confirmation of CenturyLink’s leadership position in managed hosting.

Now to slide 10, before handing the call over to Stewart, let me say I am pleased with our first quarter results. We continue to improve our top line revenue trend and we continue to believe we will improve the year over year revenue trends for full year 2013 and reached revenue stability in 2014.

We achieved strong high-speed internet and Prism TV subscriber growth. And the focused investments we have made in our key strategic initiatives have positively contributed to strategic revenue growth and continue to improve our topline revenue trend.

We believe the soft launch of Prism TV into additional markets in the first half of 2013 and planned subsequent commercial launches later this year will position us well to grow video subscribers during 2013 and beyond. Also with the realignment of our reporting structure, we continue to improve our go-to-market approach and end-to-end service delivery model for business customers.

And with the launch of savvisdirect in late 2012, our managed hosting and cloud services portfolio is now positioned to address the data hosting needs of customers of all size. Additionally, our increased focus on accountability across the organization to sell data hosting solutions is leading to improve our cross-sell opportunity.

With that, I will turn the call over to Stewart for an in-depth look at our financial results. Stewart?

Thank you, Glen. I will spend the next few minutes reviewing the financial highlights from the first quarter and then conclude my remarks with an overview of the second quarter and full year 2013 guidance we included in our earnings release issued earlier this afternoon.

Turning to slide 12, I will be reviewing the results excluding special items as outlined in the earnings release and associated financial schedules. With that let’s move to our first quarter results.

As you can see we generated solid operating revenues and cash flows. Operating revenues were $4.51 billion on a consolidated basis, at the top of our guidance for the quarter.

It represents a 2.1% decline from first quarter 2012 operating revenues. Strategic revenue in the quarter increased to 47% of total revenue from 45% in the first quarter a year ago due to growth in strategic products such as high-speed internet, high-bandwidth data services, Prism TV and Managed Hosting Services.

Adjusted diluted earnings per share for the quarter was $0.76, exceeding the top end of our guidance by $0.04, which was primarily as a result of our first quarter operating expenses being lower than we had anticipated. As we’ve discussed on prior earnings call, adjusted diluted EPS excludes special items and certain non-cash purchase accounting adjustments as outlined in our press release and associated supplemental financial schedules.

Total cash operating expenses decreased from first quarter 2012 to first quarter 2013. This decline was primarily the result of lower personnel related costs which were partially offset by higher data hosting and network costs.

We generated strong operating cash flow of approximately $1.93 billion for the first quarter and achieved an operating cash flow margin of 42.8%. Additionally, we generated $1 billion of free cash flow during the quarter, which is defined as operating cash flow less cash taxes paid, interest and capital expenditures and additional adjustments to other income.

Our strong free cash flows continue to provide us the financial strength and flexibility to meet our business objectives and drive long-term shareholder value. Now turning to slide 13, our year-over-year revenue declined 2.1% from first quarter of 2012.

This rate of decline represents a 60-basis point improvement over the 2.7% rate of decline in first quarter of 2012. Operating revenues compared to pro forma revenues for first quarter of 2011.

The decline in first quarter 2013 operating revenues compared to first quarter 2012 was primarily a result of growth in strategic revenues that was more than offset by lower legacy revenues due to access line losses and lower minutes of use and the impact of a lower universal service revenue contribution factor that has passed through revenue recorded in our other revenue line item. The growth in our strategic revenues was primarily driven by strength in high-speed internet, high-bandwidth business data services and data hosting services.

Slide 14 highlights the revised reporting structure. In early January, we announced an organizational realignment combining our business, sales and operations functions that previously resided in enterprise markets, network services and regional markets organization, into one organization which is led by our Chief Operating Officer, Karen Puckett.

We believe this change positions us to better serve our business customers by streamlining our end-to-end service delivery, supporting sales of network services to our enterprise customers by creating one cohesive organization. So beginning this quarter, the first quarter and going forward, we are now reporting the following four segments: consumer, business, wholesale and data hosting services.

Now turning to slide 15, I will discuss each of our operating segments beginning with the consumer segment first. Consumer generated $1.51 billion in operating revenues which represents a decline of 3.4% over first quarter a year ago.

Strategic revenues in this segment grew 5.4% year over year to $620 million. Our legacy services revenues for the segment declined 8.7% for first quarter 2012 due primarily to a continued decline in access line and long distance revenues partially mitigated by implementation of access recovery charge in July of 2012.

Expenses declined $41 million or 7.2% during the first quarter compared to the same period a year ago driven mainly by lower employee related expenses which were partially offset by higher Prism TV costs. Moving to slide 16, our business segment generated $1.5 billion in operating revenues during the first quarter which were in line with the same year ago period.

First quarter strategic revenues for the segment increased by 6.4% to $615 million from the first quarter 2012 driven primarily by strength in high bandwidth services such as MPLS, Ethernet and Wavelength. Excluding private line services, strategic revenue grew nearly 12% from year ago.

Legacy services revenues for the segment declined 4.6% from first quarter 2012 due primarily to continuing decline in access line and long distance revenues, partially again mitigated by implementation of the access recovery charge in mid-year 2012. Total segment expenses declined approximately $30 million or 3% driven by lower employee and bad debt expense partially offset by higher facility costs.

Turning to slide 17, our wholesale segment generated $907 million in operating revenues, a decrease of 5.7% from first quarter 2012. Strategic revenues for wholesale were $573 million, down 1.5% from first quarter 2012 as declining low speed transport services revenue offset growth in Ethernet services and data bandwidth capacity expansion by wireless carriers.

Our legacy revenues in this segment declined by 12% to $334 million reflecting the continued decline in access in long distance minutes of use and the implementation of lower access rates on the cap order rate step-up. Operating expenses for the quarter were $274 million, 12% below the same period from the prior year, driven by lower personnel related costs, lower access expense and some favorable one-time access settlements during the quarter.

Now moving to slide 18 in our data hosting segment which includes all colocation, managed hosting, cloud services and hosting related network services revenue for customers of all sizes, this segment generated $334 million in operating revenues representing an increase of 7.7% from first quarter 2012 revenues of $310 million. The growth came primarily from year-over-year increases of 4.3% in colocation revenues and 20% increase in managed hosting cloud services revenues.

First quarter 2013 revenues include approximately $15 million of revenue contribution from the Ciber IT outsourcing assets acquired in October 2012. Excluding this revenue, managed hosting revenue grew by approximately 6% year-over-year.

As Glen previously said, year-over-year revenue growth based several headwinds this quarter, including soft new sales in third quarter 2012, foreign currency exchange impact and price compression driven by declining compute and storage costs. In total, these items lowered first quarter 2013 revenues by approximately $8 million compared to the same period a year ago.

Data hosting operating expenses were $264 million in the first quarter compared to $231 million in the first quarter 2012. This increase of 14% is driven by added data center expansion operations and sales and marketing headcount to support revenue growth, including headcount for savvisdirect and enabling sales channels along with expenses related to the acquisition of the Ciber ITO assets, not present in the prior-year period.

Now turning to slide 19, we provide our second quarter and full year 2013 guidance. For second quarter 2013, we expect operating revenues of $4.49 billion to $4.54 billion and operating cash flow between $1.82 and $1.86 million and adjusted diluted EPS is expected to range from $0.63 to $0.68 per share.

Our anticipated sequential decline in second quarter operating cash flow and adjusted diluted EPS compared with first quarter results is primarily due to one higher seasonal expenses that we typical incur in the second quarter each year including annual merit adjustments. The total of that equates to about $0.04 a share and normal legacy revenue decline, partially offset by continued expected growth in strategic revenue which in aggregate is a decline of about $0.015 EPS and cost related to our continued investments in key initiatives and increased marketing and timing of some of our branding expenditures expected to be about $0.03 during the quarter.

For the full year 2013, our operating revenues, capital expenditures and free cash flow guidance remains the same as we provided last quarter. However, we have increased our full-year 2013 operating cash flow and adjusted diluted EPS guidance primarily as a result of our strong first quarter results and share repurchases through the end of the quarter.

We now expect operating cash flow to be in the $7.35 billion to $7.55 billion and adjusted diluted EPS to be in the range of $2.60 to $2.75 per share. It's also important to note that we’d expect our 2013 operating revenues compared to our 2012 operating revenues to reflect one, approximately a $35 million decline in data integration revenues due to anticipated lower cost from premise equipment sales.

And secondly, approximately $45 million lower other revenues due primarily to the lower USF contribution factor anticipated this year versus 2012. That concludes our prepared remarks for today.

So at this time, I’ll ask the operator to provide instructions for the Q&A portion of the call.

Hi guys. Thanks a lot for taking the question.

Nice quarter to start off the year. A couple of questions if I could, first, Stewart, the buyback was very aggressive.

You’ve got about a third of the $2 billion buyback that you budgeted over the neck over the two years behind you now. When you say opportunistic, should we imagine that what you're really going for is a strict $1 billion of buyback this year, a strict $1 billion of buyback next year or if the opportunity presents itself, how aggressive would you be prepared to be within the context of the full $2 billion buyback authorization?

And then second, just on the data center business, we've seen some very strong results from a lot of the data center companies out there. You talked about this quarters softness in terms of sequential growth was really in part a function of softness and billings in the third quarter.

You saw strength in the fourth quarter. You saw strength this quarter in terms of bookings.

Should we be expecting a nice acceleration starting in 2Q and if so, could you kind of size up, what kind of growth we should be expecting from that unit? Thanks.

So David, I’ll answer the first question. So we were aggressive and by being opportunistic, I mean, we will potentially spend more than half of the program in 2013.

It really just depends on the stock price and the opportunity to accumulate more shares at lower prices. So I think we’re pretty aggressive.

We’re not going to continue in all likelihood at the same pace that we did. We don’t expect to get -- we still expect to get the program done within the two-year period that we announced.

But we would expect just to probably in the year at a little bit higher than $1 billion. But again just really dependent upon the opportunity.

I will comment on that, to speak to the question, it’s like a question a little more detailed. But we feel that the first quarter hopefully in the low point for our data hosting sales, helped along the momentum we believe in our network group for cross-selling opportunities, we have a new Savvis Direct product coming out and we pointed out, the sales were strong in the fourth and first quarter.

So we feel good about where we are headed here. We don’t disclose exactly our growth target here but Jeff can address some things we're doing here and we are optimistic about the rest of the year.

Jeff?

Again in the third quarter that books for that new sales sold in that quarter was a low point. I think that the good news is Q4 and Q1 our new sales were on our plan and we are about 30% higher than that Q3 low point.

One of our other big initiatives in 2013 is leveraging the CenturyLink channels, got significant sellers, 400, about 5000 enterprise customers that we are really -- there is some early good signs, a good program got really launched at the end of fourth quarter, early first quarter and the results in Q1 were pretty positive, we were about 10% up from our Q4 sales. It gives us confidence in terms of our go forward -- this Q1 number is the low point and we will grow sequentially from there.

I think the one time -- the headwinds we have are currency and then we talked about the technology migration as some of our customers migrate from discrete hosting to more cloud based services. There is some price erosion pressure.

Our team there is very focused on catering those customers, retaining up and we will grow with them. So that’s the kind of the key points that we are trying to execute on.

Wanted to ask about consumer margin, the 65% was the level that we haven’t seen in over two years and despite that you have more IPTV in the business, I assume that is slower margin business. Given the headcount reductions that you announced, should we assume that this is a sustainable level going forward or do you anticipate some pressure going forward?

No Batya, we really just anticipate some pressure going forward in the consumer segments that we’re growing our margins down somewhat, closer to really -- in the low 60s probably. We’re really just in the second quarter starting to roll out the Prism TV and start to incur some expenses there.

We have additional markets as Glen mentioned that we will be rolling out during the year. So we expect to see increase this quarter with some of the strategic products including Prism which are in the consumer segment.

So we expect to see that margins to come down.

Can you talk a little bit about your business services organization and what sort of benefit that you are seeing from that year to date?

Frank, Karen, good afternoon. Business services, so the realignment has been very helpful in terms of a cohesive go to market and in particular some real efficiencies in the marketing organization, in terms of one product roadmap, getting the efficiencies out of one platform like (inaudible) making sure that we are leveraging all the capabilities across all the sub-segments within the business, in terms of enterprise, SMB.

And so that’s been very beneficial. And then geographically getting aligned so that there is a better coordination and there's never enough feet on the street.

So it’s actually better utilization of the sales organization. Really encouraged, I think the team is really encouraged and we are looking forward to the second quarter.

Okay. Any margin impact or anything we should expect going forward, or just more incremental blocking and tackling smaller steps?

Right now, it is just incremental blocking and tackling.

Okay. Great.

Thank you.

And we will take it from there.

Hi, there. I was just wondering if could comment on any changes you have seen from your business customers in terms of economic outlook or decisions cycles, and then also if you are seeing or foresee any impacts from sequestration in our government business?

Yeah. We think the economy is pretty fragile still.

However, in the business side, we are seeing still strong demand for business service, IT services. We had mixed signals.

We have the housing starts improving. At the same time, you get the sequestration as you mentioned.

We got the higher taxes from the first of the year, so it’s really a mixed bag in what we are seeing here. But bottom line, we think we are going to see consumer demand be weak, investing full forecast we agree with that.

We don’t see government demand weak. So we see our own growth coming from the business sectors in our view.

We were seeing demand there. We were seeing a longer cycle times as well in the business sector.

So it’s not totally negative but we are not seeing the growth by any means there that we hope to see maybe in the second half of the year. Karen will add to that.

Yeah. I would.

Two adds there. In terms of just what the different business, strengths right now in business solution really is around MPLS, Ethernet bandwidth.

And so we’ve been very successful in getting large MPLS type of customer. What’s important for these large customers to have diversity of course and as they are looking around at other carrier or letting change their position extremely well and winning or loss goes on in that particular segment, saying that relative to the economy and such.

I would say that actually there is a bright spot here because businesses, at least lot of the businesses that spoke until recently are looking for ways to do things differently. And so they really are a very serious to that, looking at that ousourcing and taking their IT and outsourcing at or even some of the network sources and getting that sourced.

I have been in conversations with very different, even that it was six or eight months ago because I believe businesses have to do things differently. And they see this as one opportunity for us.

So we are pretty encouraged with that.

Thank you. Just following up on the stock repurchasing conversation.

Would you consider using your revolver to repurchase stock with normal cash?

David, I mean we’ve really primarily used free cash flow during the first quarter. We don’t have anything drawn on our revolver now.

We will consider using the revolver to a certain extent. But again it’s going to be used in for opportunistic purchases.

We did commit to the agencies and just from to ourselves from a liquidity standpoint that since we are non-investment grade now at least at the parent company, we are going to keep a $1 billion free on the $2 billion revolver just from the liquidity standpoint.

Okay. Fair enough.

And then just data point update, did you get any dividends from your subsidiaries Embarq or QCI score?

We did pay dividends. We did pay quarterly dividends from ourselves up to the parent company, yeah from Embarq and QC.

Okay. And then finally, when would you expect to release the financials for Embarq this quarter?

Actually, we adjust our website. Yeah.

They are password protected and only those to bond investors that own the bonds in Embarq. So they are not really broadly distributed.

The QC 10-Q that will be filed prior to the due date, probably on Monday.

Okay. All right.

Thank you.

Just really quickly on nice step-up in DSO broadband, in the first half last year, just curious if you could give any more color on (inaudible) and any additional details you can provide on what type of speed customers you are taking on that value chain would be helpful too.

Mike, we missed a part of your questions, you got gargled, would you repeat the question please?

Sure, on the DSO I asked, just in terms of the competitive environment, any changes in there for the past quarter or so and then what type of speeds you see your customers take on average?

I got the speed question, I am not sure the first question. On the speed, we are seeing speed probably in the 10, 12 meg category.

So we do see customers wanting to take higher speed. And the first question was around the competitive environment, in general it is competitive environment, and continuing to be in competitive environment.

And we continue to execute very well and we will continue to be competitive.

Curious, in the bond issuance that you conducted in March, you did that at the senior unsecured and just wondering was that expeditiously in order to access term capital relatively quickly to pay down the revolver or as you proceed to share buyback end you potentially draw on the facility more in Q2 and have to, would you seek to use some of your capacity at the Holdco at the senior secured, rather than senior unsecured, potentially to issue notes which are callable to provide yourself with more optionality and maybe reduce our interest cost further?

Yeah, Stanley, at this point, first of all we did just the $1 billion issuance and we’re really going for $500 million and had so much demand and the rate was so good, we decided to take $1 billion. But we basically used that to repay the credit facility as well as we had a maturity coming up about that time of that company, so we paid debt off as well.

In terms of using senior secured debt, we’ve not discussed that at this point. I think as long as the unsecured markets are where they are.

We will continue to use the unsecured markets in the parent company.

What about in terms of adding some more interest rate optionality to the debt portfolio in terms of callables versus the normal term loans that you do now, might that be an additional way to try to optimize things as you put into the high yield entity?

We will look at it Stanley as it comes along and as we look at each potential issuance that we can get a significantly better rate and get some optionality. At this point we are basically -- first issuance we did was really almost just like we were an investment grade issuer, really was not difference at all in terms of the execution and the demand and the rate for that ---

Could you say a comment regarding cable competition, I know Karen, you said you’re pretty happy with your speeds relative to other competitors. But are you seeing cable getting more aggressive and trying to attack you on speed and then on the small business side what you’re seeing from a cable perspective?

Yeah, in terms of what I said, I think the question was around -- we will remain competitive and that’s really around the execution, in terms of speaking of that, that is a challenge clearly. DOCSIS 3 continues to be a challenge, it has been.

So it’s not a different challenge, it’s the same challenge but pretty well deployed. In terms of the cable into small business, they have been aggressive, they made margin estimate, they put feet on the street and they continue to progress in that particular area and we will continue to be very focus in the SMB and small business side of house also.

Okay. Karen, just on the high speed side, is there any thoughts internally to be accelerating trying to get fiber deeper, adjust those and be able to continue to rollout, we are seeing a lot more consumption in the home?

And I would say that our history shows that I think relative to the type of company, we are -- we have to have different toolboxes, depending on the density and the demographics. So we focus not only density but we try to use our capital in a very targeted away and going where we have the higher demographics to provide the GPON type services, if that continues to work for us.

Omaha definitely is the trial. They had a whole lot of fiber in the particular footprint from the fire video service that was there.

And so this gives us a chance in a very economical way to go in and look at, what are the propensity to buy, what are the churn rates, what are the fee take rates, what’s the best kind of market, so really excited about that. On a greenfield basis, we always try to put fiber in.

And then as long as we can kind of continue to push fiber in, when we have the opportunity we will. But again, fiber doesn’t know it’s incredibly important and so we got different technologies depending on the profile of the network and the customers segment we are going after.

Great. Thank you.

Hey, guys. Thanks.

Can you talk a little bit more about the Prism TV efforts? In Phoenix, you said that there was a good start there.

Can talk more about the one gig efforts in Omaha and the pending soft launch, should we expect a higher general OpEx, both from the Omaha efforts and the soft launch or is that sort of baked into the guidance at this point and figured you could get through it?

It’s definitely baked into the guidance. And we’ve taken a lot of cost out of business, as we continue to bring Prism in.

So we’ve done a pretty good job of balancing that. In terms of Phoenix and Prism, we are into soft launch, incredible encouraged by the results, not only from the customers take rate but frankly from the execution of the operational teams.

And really it's one of the best soft launches that we have but you get key learnings along the way. In terms of Omaha, a couple of things.

The reason we are there because there was a video product that Qwest had there prior. The franchise agreement was up.

We had some decisions to make. We looked at that footprint which is a nice, dense area and it was just left with lots of fiber running right by the home and so that give us a rich opportunity to really try out GPON in a bigger way.

And so again, the reasons for that is to really test the technology to take rates in a go to market and take the learning and then make decisions from there.

I might just add to that, Phil. If you look at the rest of the year and you look at the expenses that have been increasing as we mentioned -- Stewart mentioned earlier, lot of expense -- lot of the issues driving expenses or the factors driving expenses is our investments in the new service like Prism, our Data Hosting expansion, our broadband expansion where we have business cases that are going to drive revenues or are tied to revenue, even including our fiber to the tower works.

Lot of our CapEx as well as our OpEx the rest of the year are tied to growth efforts. So we are pleased with our ability to really contain our expenses or focus our expense, our investments as we like to tell them all, all these out there, we expect revenue growth to occur over the next couple of years.

And if I may, one more quick one. I apologize if you talked about this in your prepared remarks but you talked about one-time expense reductions your experienced during the first quarter.

Can you just detail for this for us a little bit?

Yeah. Phil, we had some probably about $20 million of one-time items that were expense reductions and really some timing items as well in the first quarter that weren’t spent, that will be spent later in the year, such as our branding campaign, that got started a little bit late.

And so some of the expenses that we expected in the first quarter get pushed out in the second quarter. So just a few items like that, a few items from the standpoint of either one-time credits that we had in the quarter, expenses related to tax settlements, things like that.

A large access settlement.

Even we had an access settlement as well.

Got it. Thank you.

Thank you, Saeed. We are pleased with the solid results which we achieved in the first quarter.

Customer diversification and product portfolio expansion in recent years has positioned us well to grow our strategic revenues from our mix of small and large enterprise customers. We also believe our strategic product portfolio positions us to differentiate our cloud and managed services offerings through the bundling of both network and cloud services, the expansion of our Prism TV service from the recent launch of savvisdirect, our managed hosting cloud services platform for small and medium business customers further strengthens our product portfolio and should provide us additional revenue growth opportunities in 2013 and beyond.

And finally, I’m pleased with the strong progress we made on the share buyback program over the past three months. And we look forward to the opportunities through the remainder of this year presents.

Thank you for joining our call today and we look forward to speaking with you in the weeks ahead.