Matt Smith – Treasurer and Vice President of Investor Relations Bob Currey – Chairman and Chief Executive Officer Bob Udell – President and Chief Operating Officer Steve Childers – Chief Financial Officer.

Scott Goldman – Jefferies Jennifer Fritzsche – Wells Fargo Frank Louthan – Raymond James James Moorman – D.A. Davidson Matt Swift – Robert W. Baird & Co.

Good day, ladies and gentlemen, and welcome to the Consolidated Communications Holdings, Incorporated, Third Quarter 2014 Results Conference Call. (Operator Instructions) As a reminder, this conference is being recorded. I would now like to turn the call over to Matt Smith, Treasurer and Vice President of Investor Relations. You have the floor, sir..

Thank you, Andrew and good morning everyone. We appreciate you joining us today for our third quarter 2014 earnings call. At the conclusion of the prepared remarks, we will open the call up for questions.

Joining me on the call today are Bob Currey, Chairman and Chief Executive Officer, Bob Udell, President and Chief Operating Officer and Steve Childers, Chief Financial Officer. Please review the Safe Harbor provisions in our press release and in our SEC filings for information about forward-looking statements and related risk factors.

This call may contain forward-looking statements within the meaning of the Federal Securities laws.

Such forward-looking statements reflect among other things management’s current expectations, plans and strategies and anticipated financial results all of which are subject to known and unknown risks, uncertainties, and factors that may cause the actual results to differ materially from those expressed or implied by these forward-looking statements.

In addition, today’s discussion will include certain non-GAAP financial measures. Our earnings release for this quarter’s results which has been posted to the Investor Relations section of our website contains reconciliations of these measures to their nearest GAAP equivalent. I will now turn the call over to Bob Currey for opening remarks.

Bob Udell will then provide an overview of our third-quarter results, as well as an update on the Enventis acquisition which we closed on October 16. Steve Childers will then provide a more detailed review of the financials and an update to our 2014 guidance.

Bob?.

Thanks, Matt and good morning everyone. I appreciate you joining us today, as the third quarter was a busy one for Consolidated. We continue to focus on our strategic transition into a leading broadband and business company while working diligently on closing the Enventis transaction, which we accomplished in just three-and-a-half months.

We're excited about having the Enventis closing behind us and what the future offers for the combined company. Now before I turn the call over to Bob Udell, let me comment on the press release we issued on Tuesday, with regards to the organizational transition.

Since we named Udell as Chief Operating Officer in May of 2011, we have put together carefully, thought through an orderly transition of responsibility. He is ready to take over the CEO title, and my continued role as Executive Chairman will ensure a smooth transition. So with that, let me turn it over to Bob to discuss the quarter..

Thank you, Mr. Currey. I am excited about this additional responsibility and I'm grateful for the leadership and oversight Bob has provided the company and me personally over these last several years. And I appreciate the ongoing support I will receive from him in his role as Executive Chairman.

The company is well positioned, and with the strong team we have in place, we will continue to execute on our strategy and deliver results to support our investors, customers and employees. Now, let me provide the highlights of our quarterly results and then I’ll give an update on Enventis.

Results in the third quarter were $149 million with 78% coming from business and broadband services. We continued to see solid growth in our commercial and carrier sales channels with a year-over-year increase of 4.7%. Demand for our Metro Ethernet product remains strong as revenue increased 14% compared to the third quarter of last year.

Adjusted EBITDA for the quarter was $67.1 million, and the payout ratio was 72.9%. We have been expanding our footprint and increasing our commercial sales focus as we continue our strategic transition to less reliance on regulated revenues.

Now these investments result in higher expenses in the near term, but provide long-term benefits to the company. Since third quarter of last year, we have added 21 commercial sales resources delivering solid revenue growth in that area.

Also, during the quarter, adjusted EBITDA was negatively impacted from lower distribution in our Verizon Wireless partnerships of roughly $2 million below our original expectations. As Verizon recently reported, margins were impacted for them by handset and tablet subsidies.

Our distributions were also impacted by partnership capital expenditures that were moved forward from 2015 for data capacity needs. We view this as short-term volatility and continue to feel good about the growth prospects of our distributions going forward.

With respect to customer connections, we added 1802 data subscribers while video subs were essentially flat. Consumers, as we know are moving more to over-the-top video, and with continued increases in content costs, our focus is on profitable growth and securing the broadband connections for both consumers and businesses.

We have a fiber-rich network that allows us to be very competitive with our broadband offerings. In mid-September, we launched a 100-Meg internet product in most of our markets and we will be launching a 1-Gig product by the end the year.

While consumers are not often using these speeds, we continue to see bandwidth speed demand increasing and our fiber-rich network allows these upgrades. On the voice side, we added 284 commercial voice feeds which are typically bundled with our Metro Ethernet service. Moving on to wireless back-haul.

We ended into agreements for an additional 14 sites during the quarter, bringing our total under contract to 860. We installed service to 34 new sites and have 86 pending installations in the pipeline. We continue to be active in several wireless RFPs and expect demand to remain high into 2014.

Now finally, before I turn the call over to Steve, let me provide an update on the Enventis acquisition. Just a reminder, we announced the acquisition on June 30th and closed it on October 16th. We did a lot of work in a short period of time and we couldn’t be more pleased with the outcome.

Enventis has a strong competitive position with its extensive fiber infrastructure and technology-advanced product portfolio. This acquisition advances our strategy of expanding our footprint for continued broadband growth, increasing our product offerings and strengthens our balance sheet.

At the closing of the transaction, we achieved $4.5 million in annualized synergies towards our two-year target of $14 million. In addition, we closed on the escrow of our $200 million in 6.5% unsecured notes and paid off $150 million of outstanding Enventis debt.

We used the excess proceeds to purchase $46.8 million in face value of our outstanding $300 million 10.875% notes. As a result, this will save us over $2 million in annual cash interest expense. The actions we have taken and the ongoing benefits we will achieve provide our shareholders with a solid company and an attractive dividend.

I am excited to have the great employees of Enventis join the team, and I look forward to what we can accomplish together. And with that, I'll turn the call over to Steve for the financial review.

Steve?.

Thanks Bob. Good morning to everyone. This morning, I will review our quarterly financial performance and then discuss our 2014 guidance which has been updated to include Enventis. Operating revenue for the third quarter was $149 million compared to $150.8 million in the third quarter last year.

Increases in our commercial carrier broadband revenues were more than offset by declines in legacy voice services, network access and subsidies. Total operating expenses, exclusive of depreciation and amortization were $89.1 million and were flat, compared to the same period last year.

Higher expenses from our commercial sales resources and increase of video programming costs were offset by our continued cost savings initiatives. Net-interest expense for the quarter was $20.7 million versus $20.6 million in the third quarter of 2013.

The current quarter included $1.1 million in amortization expense for the Enventis bridge commitment fee. We also incurred $500,000 in interest expense for the 13 days in the quarter that our successful $200 million bond offering withheld in Escrow. Other income net was $8.6 million, which was down $400,000 compared to the same period last year.

For the quarter, we received $7.6 million in cash distributions for Verizon Wireless partnerships compared to $8.6 million for the third quarter of 2013. As Bob mentioned, the voice subsidies and capital needs drove the decline.

Weighing all these factors on a GAAP basis, for the third quarter of 2014, net income was $7.6 million and net income per common share was $0.19. This compares to net income from continuing operations of $10.4 million and net income per common share of $0.26 for the third quarter of 2013.

As detailed in the adjusted net income per share schedule in the earnings release, our adjusted net income and adjusted net income per share were $8.9 million and $0.22 respectively. Adjusted EBITDA was $67.1 million in the quarter, compared to $71.2 million for the same period last year.

Capital expenditures for the quarter were $25.6 million with over 63% being driven by success-based projects. From a liquidity standpoint, we ended the quarter with approximately $4.9 million in cash and $60 million available under our revolver. For the quarter, our total net-leverage ratio as calculated in our earnings release was 4.34 times to 1.

Cash available to pay dividends was $21.4 million, resulting in a dividend payout ratio of 72.9%. Now, let me discuss guidance. We are updating our guidance to include Enventis as if we had owned the company for the full year. Therefore, on a pro forma basis, capital expenditures are expected to be in the range of $129 million to $133 million.

Cash to interest costs are expected to be in the range of $78 million to $80 million and cash income taxes are expected to be in the range of $12 million to $14 million.

With respect to our dividends, our Board of Directors has declared the next quarterly dividend of approximately $0.39 per common share, payable on February 2, 2015 to shareholders of record on January 15, 2015. This will represent our 38th consecutive quarterly dividend. With that, I’ll turn it back over to Bob for closing remarks..

So in summary, we had a solid quarter, and the closing of the Enventis transactions have us very excited about our future. By combining two strong businesses that provide greater scale and geographic diversity, and will provide us a platform to continue our delivery of our strategy. With that, I would like to open it up for questions.

Andrew?.

Thank you. (Operator Instructions) And our first question comes from the line of Scott Goldman from Jefferies. Your line is open..

Hey, good morning guys and congratulations to both Bobs. I guess, a couple questions, if I could. First, you talked on the cost and EBITDA side of the equation about some of the investments you are making around the commercial sales that may have impacted EBITDA aside from the lower distributions from Verizon.

Just wondering how long you see some of these impacts from commercial sales depressing the margins, as well as the programming-cost side of the equation? And then secondly, on the video side, I think you mentioned, you had flattish adds this quarter. You mentioned you are managing that for more profitable growth.

With some of the recent headlines out about over-the-top with HBO and CBS, just wondering how you guys are thinking about smaller video packages to appeal to a different demographic and what the associated economics of that might look like?.

Let me take the last part of that question first, and I appreciate the question. The video, as part of our triple-play portfolio continues to be an attractive retention tool. And so while we are de-emphasizing it because of the capital cost of set-top-boxes and the increase in programming costs.

We are very focused on broadband growth which is much higher margin for us and enhancing our portal to facilitate over-tie-top access by our customers through a unified logging. So, I wouldn’t call it necessarily a demographic shift as much as an adoption rate that both the content providers as well as the device manufacturers are facilitating.

So we are going to watch that closely and continue to focus on penetration of broadband and increase in video penetration with only a stronger eye towards profitability..

Scott, this is Steve, the first part of your question, kind of the pressures on EBITDA for the third quarter primarily in commercial sales commercial sales and Verizon distribution. Bob kind of addressed the video programming content.

We think we are making very key strategic decisions and how we are deploying the commercial sales teams across our platform and excited about what the Enventis acquisition is going to mean to us. We think that’s just a matter of time before turn the level of expense with the ramp for the commercial sales team matches up with the new revenue sales.

And again, as we called out, 4.7% growth for commercial sales – commercial and carrier sales combined. So we are pleased with the results there just kind of going through a ramp process. On the wireless itself, again that was a big impact in the quarter, we’re down by $2 million compared to our expectation.

As Bob said in his remarks, mean additional handset subsidies as well as some CapEx being pulled forward by Verizon into 2014 to address some capacities.

We think there is going to be short-term volatility in our numbers, but again, we still are very committed or excited about the $35 million or $36 million a year that we are going draw in wireless cash flows. And we think that, again, we will have some short-term volatility, but hopefully that would be behind us as we go into 2015.....

Great, Thanks guys..

Thank you. Our next question is from the line of Jennifer Fritzsche from Wells Fargo. Your line is open..

Great, thank you for taking the question. Congratulations to both Bobs, as well. I wanted to ask a little bit about dark fiber. It's obviously become a major part of the conversation.

And is that something you will emphasize? Do you see that becoming a larger part of your overall business? And then just to add to that, as you – I know you just closed on an acquisition, but as you look out two other acquisitions that might be in this space, is it fair to say that you would continue to look in this fiber-centric area?.

Yes, Jennifer, thanks for the question. With regard to dark fiber, let me start the answer this way. We are always going to emphasize managed services and a consultative sales approach, because that’s certainly what we are good at and where we see the best margin returns.

Dark fiber is viewed as an enabler, because we leveraged our common assets across commercial carrier and consumer who have used our fiber as a way to keep the relationship with large wireless players and to extend our network and offset construction cost. But it isn’t our first choice for service offering.

Related to M&A, if you look at the Enventis closing, just a few weeks ago, that’s really our focus. We want to exploit the value of bringing the teams together, leverage having more market diversity in our portfolio that’s how it served us well.

However, if a fiber asset became available contagious or near some of our newly acquired or existing operations, that of course would be of interest to us. But we are not seeking – going out seeking larger deals such as Enventis or anything that size in the near term..

Great. Thanks Bob..

Thank you. Our next question comes from the line of Frank Louthan from Raymond James. Your line is open..

Great, thank you. I apologize if I missed this. But a couple of quick questions. One, when is – is there is a lock-up on the shares issued for Enventis, can you give us an idea of that might be? And then a couple of quarters ago, you made a fairly concerted effort at driving broadband customers and over-the-top.

Is that – are you still making those marketing efforts? And has there been any new competitive impacts, viewers expanding their footprint or other providers that have made things more competitive in your markets?.

Frank, this is Steve, I’ll take the first part and Bob can take the next couple of questions. With respect to Enventis and the new shares that are issued, there is no lock-up..

Yes Frank, and regarding the competitive situation, we are really not seeing drastic changes there other than, continued focus on speed increases which we’ve been quite effective at also advancing for our customer base. And so, I think really in the over-the-top area, we are investing our energies in really two buckets if you will.

One is, it’s debilitating enhancements to our unified portal for consumer log in and making more over-the-top content available via that and the second is, we are upgrading speeds across our entire network and my comment is that earlier in our remarks that, we’ve launched a 100 meg product that’s available to roughly 40% of our base.

We’ve been upgrading people across our markets to 10, 20 and in some cases an 80-meg product. So, that’s really become our sweet spot. We’ve got 40% of our customer now on either a 10 or 20-meg products and that is how we are working to lead customers to a more profitable package..

Okay. Great and congratulations as well on all the changes. Appreciate the time for the questions..

Thank you. .

Thank you. Our next question comes from the line of James Moorman from D.A. Davidson. Your line is open..

Yes, thanks.

Just to follow up on the competition, is there anything else with the sequential increase in line losses, I guess, was there anything from price increases that might have had anything to do with that? And then also on the 1-Gig rollout, is it that much of a substantial increase in cost to do this? And are you – any concerns with getting a return on that if too many competitors start offering 1-Gig as well? Thanks.

.

James, welcome and thanks for the question. With regards to the line loss, there is some of that’s been self-imposed. We are seeing a good transition in the commercial space from personal access lines to our VOIP platform, hosted VOIP platform that rides over our Metro Ethernet lead product.

With regards to the price increases, we did in order to stay consistent with the STC minimum rate increase price at rates in Texas and Pennsylvania and this was the first full quarter of that impact and the churn was actually above what we expected..

Thank you. Our next question comes from the line of Matt Swift from Baird. Your line is open..

Yes, good morning guys. Can you talk a little bit more about those Verizon partnerships? You said they came in $2 million lower than your expectations.

How much visibility do you have to decisions they are making in terms of both CapEx and handset subsidies within those systems?.

Thanks for the question, this is Steve. With respect to Verizon, again, we are a limited partner in all five of those situations. I think and as I said earlier, they generate $35 million $36 million a year. We have visibility into what their annual budget is into what their annual operating budget.

Matt Smith, our Investor Relations and Treasurer sit from the Board for each one of those partnerships. So we do have some insight into what’s going on from an operating standpoint. But again, we are limited partners and Verizon is clearly driving the day-to-day operations..

So are you only hearing from them – or only seeing numbers once a quarter then from that?.

Yes, that would be fair..

Got it.

Can you see any changes to those, I mean, would there be a situation where you would increase your ownership in any of the partnerships or could be either adding or divesting to some of those?.

Well, each one of the partnership, again, there is – we own anywhere from 2% to 23%, 24% depending on the partnership and Verizon has control of all the partnerships, but we have first right of refusal if any – if the other independent telcos would want to sell and we’ve exercised that right a couple of different times to increase our overall ownership interest and we would probably continue to do so, if those opportunities presented themselves in the future.

.

Got you, but you don't anticipate any changes in the near-term to those?.

No. .

On the M&A question you were asked earlier, could you – I know your preference is for fiber and things like Enventis right now.

Could you see a situation where you bought more RLEC type lines?.

This is Bob Udell. I wouldn’t see that as our first priority. Really, our strength is in leveraging those fiber assets for broadband services and making sense out of those to our customers. Well, there is still some life left in copper. We see technological advances blip, bonding that allows us to bring in recent test 100-Meg to customers.

That’s not our first choice for assets or company’s acquisition targets..

Got it.

Are you guys willing to provide any kind of CapEx guidance for 2015?.

We will, most likely in the next quarter call or in February, is when we report on the year..

Yes, I mean, we did update our year-end 2014 guidance to reflect Enventis in a way, maybe the way to think about it is, we happened been spending roughly $100 million a year on CapEx. They have done their numbers for this year of $28 million to $30 million.

So, you know, we give 2015 guidance on the next call, it’s probably the fair way to think about it. .

Got it. That's helpful. And then just a last one, is there a situation where you could see yourself buying your stock back, the stock has obviously taken a little bit of a hit today.

Is that’s something you talk about with the Board with your cash flow characteristics, maybe instead of – or in addition to the dividend?.

It is something that we talk about periodically with the Board and where it’s at today and we are certainly not, even if it backs up a little bit today, we are certainly not going to buy – we don’t feel like we need to support the stock, I guess, with the buyback, we would rather consider paying down debt or building cash backup for acquisitions..

The only comment I would add to that is that, we are pleased with the acquisition and the operational (inaudible) to advance our strategy, but the de-levering of our balance sheet. So, buyback would be counterproductive to that. .

Got it, great. Thanks for the questions guys..

Thank you. (Operator Instructions) And that’s all the questions that we have for today. I would now like to turn our call back over to the speakers for closing remarks..

Well, thank you again for joining us today and for your continued interest and support of Consolidated Communication. We hope, you will again join us next quarter and thank you and have a great day..

Ladies and gentlemen, thank you for your participation in today’s conference. This now concludes the program and you may all disconnect. Everyone have a great day..