Good day, ladies and gentlemen, and welcome to the Consolidated Communications Second Quarter 2017 Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. [Operator Instructions] As a reminder, this conference is being recorded.

I'd like to introduce your host for today's conference, Ms. Lisa Hood. Ma'am, you may begin..

Thank you, and good morning, everyone. We appreciate you joining us today for our second quarter earnings call. Joining me on the call today are Bob Udell, President and Chief Executive Officer and Steve Childers, Chief Financial Officer. After our prepared remarks we will open the call for questions.

Please review the Safe Harbor provisions in our press release and in our SEC filings. Today's discussion includes statements about expected future events and financial results that are forward-looking and subject to risks and uncertainties.

A discussion of these factors that may affect future results is contained in Consolidated's filings with the SEC which are available on our Website. In addition, today's discussion will include certain non-GAAP financial measures. Our earnings release has been posted on the Investor Relations section of our Website at Consolidated.com.

It does include reconciliations of these measures to the nearest GAAP equivalent. With that, I will turn the call over to Bob Udell..

Thank you Lisa and good morning everyone and thank you for joining Consolidated Communications Second Quarter call. Lisa recently joined us as Vice President and Treasurer and will lead investor relations. We're happy to have Lisa with us from FairPoint.

Jennifer Spaude who has been our Investor Relations lead for a interim period will continue in her role leading corporate communications. We're pleased to have both Lisa and Jennifer on our team. Turning now to the quarter, our recent closing on the FairPoint acquisition marks a strategic milestone in Consolidated's history.

This acquisition substantially expands our fiber footprint and adds to our skilled team of seasoned and passionate employees. We're incredibly excited about the opportunities ahead. We closed on the FairPoint acquisition on July 3rd right on schedule after securing regulatory approval in all 17 of FairPoint's operating states.

This acquisition aligns with our strategic focus on expanding our fiber network and this business combination gives us meaningful scale and resources to serve our customers. We are eager to leverage the combined teams expertise and realize the many benefits of this merger.

The transaction is meaningfully accretive to free cash flow in the first year significantly improves our dividend payout ratio and reduced leverage by well over half the turn at closing.

The financial benefits associated with the combination in the form of cost saving and reduced financial leverage provides us additional operating and strategic flexibility as well as the ability to continue investment in expanding broadband availability and speeds across our combined footprint.

Our estimated two-year synergy target is $55 million and we'll be able to utilize $300 million in FairPoint's federal net operating losses. With respect to synergies, we are off to a fast start having achieved $15 million in annualized cost savings at close.

This acquisition adds 22,000 fiber route miles creating significant scale with a network now extending 36,000 fiber route miles across 24 states making Consolidated Communications a top ten fiber-based provider in the United States. We're excited with the early traction of our integration efforts and there are no surprises.

We've outlined and prioritized projects and begun integration projects with a focus on reducing customer pain points and expanding broadband speeds. Near term projects are in motion and include connecting our networks and the migration of our financial platform.

We have a disciplined integration process and plan focused on ensuring there are no gaps, also ensuring a smooth transition for customers and a strong project management focus to ensure timelines and budgets are met. Consolidated has a successful track record of integrating companies having completed three acquisitions in the last five years.

We're confident in our ability to integrate FairPoint effectively and with no negative customer impact. In fact, I've already met with more than half of the FairPoint employees in town hall meetings and I'm very impressed with their genuine passion and desire to improve services for customers.

We're very excited about the best practices we'll leverage and the opportunities we have to improve the service experience across the FairPoint markets.

Now turning to our second quarter results, I'll comment on standalone consolidated communications and will refer you to the financial tables found in the earnings release for FairPoint results which are in line with our expectations.

We delivered a solid second quarter as we grew data and Internet connections 4% year-over-year reflecting our progress on delivering high bandwidth services to our three customer channels; carrier, commercial and consumer.

Our targeted network investments and strong operational focus continue to drive improvements in our business and create value for our shareholders. We increased our on net lit buildings 11% year-over-year and continue to evaluate all success based sales opportunities.

The trends we are seeing in our business support our network-based strategy and focus to offer high bandwidth services over our fiber infrastructure. Now turning to our commercial and carrier business, we had another strong quarter of Metro Ethernet growth with a 34% increase in units from a year ago.

We recently achieved our MEF 2.0 certification highlighting our compliance with globally recognized Metro Ethernet standards required by many large enterprises and wholesale customers. And we continue to see solid interest in our Cloud product suite which is an important part of our consultative sales approach.

We're doing a good job of up selling existing customers and increasing wallet share. We see a very aggressive pricing in the small to medium business market and are leveraging our inside sales channels for acquisition and retention.

We're pleased with the success of our Cloud voice service which offers high reliability and cost savings creating a strong value proposition for our small and mid-sized commercial customers.

As we look up market we are well positioned to compete with more complex solutions including multi service and multi location customers where we generally see less competitive pressures than with simple service. We are also pleased with our solutions based sales approach leading with our Metro Ethernet managed, hosted and Cloud based solutions.

Within our carrier channel we are in combination with Fairport, we now have approximately 2600 towers under contract. We are seeing increased activity for small cell and dark fiber solutions. We are working on a number of FRP's and see solid opportunities with regional and national service providers.

As we have been reporting for the last few quarters, we continue to experience bandwidth price compression resulting in contract revenue write-downs, however, the positive side of these price changes often bring opportunities to complete mid-term renewals which allow us to extend contract terms and to secure more sites in the process.

Now turning to consumer, 96% of Consolidates broadband capable homes can subscribe to a 20 meg or higher plan and 42%, as we said in the past, can get 100 meg or more. Increasing speeds is a key priority for us.

We achieved a 15% increase in subscribers to our 20 meg or greater services year-over-year and we're well positioned to offer the higher speeds customers demand as we focus investments on network upgrades through the Connect America Fund 2 Program and through our own speed prioritization plan.

We're continuously expanding our over-the-top content within our video service offering and the launch of our CCI All Access app in the second quarter has been very well received by customers. We also launched a VEMOX, [VEMIX], Spanish streaming TV service and we're the first provider in the U.S.

to offer this as an example of our effort to continuously expand and enhance our over-the-top content offering. Our business in broadband strategic revenue accounts for 82% of our total revenue.

This shift has occurred over a five-year period with a concentrated focus just as commercial and carrier revenue grew to be the largest component of our overall revenue composition.

On a pro forma basis, approximately 72% of our total revenue will be from business in broadband representing an opportunity to grow the strategic revenue as we have proven our ability to do so in the past. This in turn offsets legacy declines. Now I'll turn the call over to Steve for the financial review.

Steve?.

Thanks Bob and good morning to everyone. Today I'll provide an overview of our second quarter results along with some pro forma information on our chief financial metrics and provide updated guidance to reflect FairPoint operations and results.

Operating revenue totaled $170 million compared to an adjusted $176.5 million a year ago after excluding $10.5 million of revenue from the equipment sales and IT services business which we sold in late 2016.

Consumer revenue after adjusting for the sale of the Iowa ILEC was down $3.1 million largely due to decline voice services and the expected churn in our low margin digital TV services as we focus on our over-the-top strategy in broadband as well.

Commercial and carrier revenue grew $2.7 million in the quarter largely due to our 2016 Champaign telephone company acquisition and continued growth in that market. Our carrier channel has been significantly impacted by price compression and some churn on tower contracts that occurred in the third and fourth quarter of 2016.

Subsidies and access revenue adjusted for the sale of the Iowa ILEC were down $1.8 million and $2 million respectfully. Subsidies were impacted by the third quarter 2016 step down of CAF 2 funding. Total operating expenses exclusive depreciation and amortization were $107.9 million compared to $120.4 million for the same quarter of last year.

The year-over-year decline in expenses is primarily related to the divestitures as previously discussed. Net interest expense for the quarter was $33.9 million compared to $19.1 million in the second quarter of 2016.

The year-over-year increase in interest expense is primarily related to the acquisition of FairPoint in our December refinancing of FairPoint's debt. The second quarter includes $3.5 million in amortization of commitment fees associated with the financing delivered at the signing of the definitive agreement.

In December, subsequent to announcing the transaction we converted the original transaction financing to commitments under an incremental $935 million secured term loan. Starting January 15 we began to accrue interest on [ticking] fees at the rate of approximately 4% on this committed capital.

This resulted in an additional $9.7 million in interest expense being recognized in the second quarter. In the second quarter we also incurred $1.8 million in non-cash interest expense associated with a new interest rate they just put in place for the incremental acquisition debt.

The increased expense was partially offset by the refinancing of the company's legacy, $900 million term debt in October of 2016 which resulted in $2 million in annual cash interest savings. Other income net was $8.3 million compared to $8.6 million in the second quarter of 2016.

Cash distributions from our wireless partnerships in the quarter were $7.7 million, essentially even with distributions a year ago.

Weighing all of these factors and adjusting for certain items outlining the table in our press release, adjusted net income was $8.1 million in the second quarter and adjusted net income per share was $0.16 which compares to $10 million and $0.20 per share for the same period in 2016.

Adjusted EBITDA was $72.5 million in the second quarter compared to $78 million a year ago. The year-over-year change is primarily due to decline in high margin subsidies, network access and legacy voice services. In the quarter we invested $29 million in capital or 17% of revenue back into the business.

We continue to have flexibility in our capital plans with two-thirds tied to success based opportunities and a focused fiber deployment. Our capital investments have to meet our internal payback and return threshold.

From a liquidity standpoint we ended the quarter with approximately $16 million in cash on hand and the full $110 million revolver available to us. For the second quarter our total net leverage was 4.71.

As illustrated in the table in the earnings release on a pro forma basis as of June 30, 2017 our net leverage ratio would be approximately 4.25 times.

Additionally, given effect to the targeted $55 million in synergies which we anticipate will be realized within the first two years from closing, our net pro forma leverage would be approximately 3.9 times. Cash available to pay dividends was $25.1 million resulting in a dividend payout ratio of 78% for the quarter.

The acquisition of FairPoint significantly improves our dividend coverage as this transaction gives us access to FairPoint's already strong cash flow, the benefits of synergies, significantly improved financing terms and a tax shield of their NOL's.

As illustrated in the table within our earnings release, our dividend payout ratio on a pro forma basis for the second quarter would have been approximately 53%. Our board of directors declared the 49th consecutive quarterly dividend of approximately $0.39 per common share table on November 1 to shareholders of record on October 15.

Our commitment to the dividend is as strong as ever and the FairPoint transaction has significantly lowered the payout ratio. We are updating our full year 2017 guidance to include FairPoint as if we closed the transaction on January 1, 2017. Our pro forma 2017 guidance is as follows.

We expect cash interest expense excluding ticking fees and commitment fees to be in the range of $111 million to $116 million.

Cash income taxes are expected to be in the range of $2 million to $4 million and we expect capital expenditures to be in the range of $230 million to $235 million with a priority on success-based investment that drives expansion of our fiber network in support of commercial and carrier customers while improving speed and minimizing pain points for our consumer channel.

To recap, we delivered consistent results in the second quarter. We are very excited about the FairPoint acquisition and we are making solid progress on achieving our 2017 priorities. With that I'll now turn the call back over to Bob for closing remarks..

Thank you, Steve. In summary, we are confident in our ability to execute on our strategy and seamlessly integrate the FairPoint operations.

As we work to leverage the significantly expanded fiber network and a skilled team of employees we are even more excited for this business combination -- more excited about this business combination which will result in even stronger and more competitive company.

We're committed to delivering value to our shareholders through our long-standing dividend and long-term sustainability providing value to our shareholders, our customers and our employees. Thanks for taking time to join the call today and we'll now take questions.

Terrance?.

Thank you. [Operator Instructions] And our first question comes from Frank Louthan from Raymond James. Your line is open..

What sort of early evidence can you point to as far as the integration that we can start to see and what are sort of the near-term leverage you can pull to help with the margins and the top line and then related to that, how many systems, IT systems, do you have to convert and over what sort of timeframe are you looking to do that?.

Yes, there's three parts there and I'll start with the early indications. You know, the first indication is the synergies are a bit ahead of our expectation with $15 million delivered at close.

We've always been focused in a discipline way on line of site to those and when we discover more opportunity and we seize it but we're also investing back into the business and so we're delivering a net number of that synergy we can realize even after we put some money back into marketing programs.

And so that would lead me to the point around the more anecdotal observations.

You know, I said there's no surprises and that's really true with respect to anything negative but the positive surprises have been around the employee response, the receptivity to our passion for improving the service delivery to customers, we have some new test sets that we've demonstrated in our history, reduced customer pain in terms of Wi-Fi coverage in a home or business that are already being deployed over the next month to 60 days in the FairPoint markets.

We're working quickly on bandwidth upgrades and have the capital allocated within our guidance to quickly connect the fiber network which FairPoint has deployed so well for the carrier and the wholesale customer channel but not leverage for the residential. And so well, 60% can get 15 meg in the FairPoint footprint.

We think it's a short put to raise that quickly and so I think those are some of the indications of early traction. With regards to margins, we see a relatively seven to ten point spread on their margins to ours and we've historically been very good at improving that over time so synergies will play a role in that.

We think that will affect the revenue curve, on a go-forward basis so that will help.

There's efficiency gains in terms of customer process that we can already see a line of sight to which will include increasing self-serve adoption for both the consumer and the commercial channels so I can't give you a specific timeline forecast, or I guess I won't, but we feel pretty confident that we'll move them towards what we think is a 40% plus EBITDA margin business.

What did I miss? Systems. With respect to systems, this is not a situation like others have faced where you're spinning off an asset and you've got to stand up new platforms just to operate the existing business. We have no urgent system activity other than those that will accelerate self serve capabilities and reduce customer pain.

I would make the exception that the ERP platform, the financial system, Childers and Steve Shirar who leads the integration effort for us are collaborating and moving quickly to get us on all onto PeopleSoft but that's the only system priority in parallel we'll be working through the inventory management so that we have the inventory of all of the fiber assets on one platform overtime but we've done that in every case.

So those are the top two priorities and they really don't affect service delivery to customers, they really are an enhancement to our ability to provide more efficient process and eventually self-serve..

That you, that's very helpful..

And our next question comes from Scott Goldman from Jefferies. Your line is open..

Hi, I guess good morning still here. Thanks for taking the questions.

I guess Bob I apologize if I missed but one of the things you just talked about was levering the fiber in particular in the Northeast which I think you said FairPoint had really been more focused on the carrier side and maybe there's opportunities to really expand that onto the enterprise side of the equation.

Just wondering if you could maybe walk us through what we should be expecting in terms of how you can go and attack that opportunity over the coming quarters or next year or so? Is there a network activity that has to be done up there before you can do that? Are there hiring needs that you need to do around a sales force or can you leverage existing staff either within legacy or within the acquired to be able to do that? That would be helpful.

And then secondly, if you could just talk a little bit about the performance in data and transport this quarter, obviously a nice rebound from what we've seen in the recent quarters. Maybe you could explain a little bit of what you're seeing as far as the driver there and what the outlook might look like for the second half of the year. Thanks..

Yes, let me take the second part of that Scott first and then I'll use that to explain how we'll tie that same experience in the FairPoint property.

In the legacy Consolidated areas we've been expanding our speed capability year-after-year driving 100 meg to 42%, 20 meg to over 96% and so while that looks maybe incremental when you look back through history, we've seen our customers move up market quickly from the 3 meg and 6 meg product into the fastest growing product set of the 20 meg and the 100 meg.

So the increase there has been significant. The same logic will apply in the FairPoint property. The fiber that they deployed they've done in less than seven years what many of us have taken 20 or at least 15 years to do and it was to substantiate and retain the large customers and they did a very good job of that.

It wasn't leverage as well for the commercial and the residential and it's interesting as I met with many of the employees, the hunger that's there to connect that as quickly as possible to the controlled environment of [indiscernible] and the huts that have the distribution points and access to the residential and commercial customer base there.

So it's not a ton of capital. In some cases it's a set of electronics. In other cases it's there and the cards are there to provide the service and it hasn't been fully marketed and so there won't be investments there.

And so we're coordinating the brand change in the early part of next year with some of the projects that allow us to increase the bandwidth as quickly as possible with a target of making those launches, those bandwidth ad launches coincident with the brand change and so the same thing you've seen in Consolidated's history is what you'll see evolve in FairPoint's history on a shorter timeline.

With respect -- I think I hit most of your question there.

Scott did I miss anything?.

No, I think you covered it.

Just if there's anything beyond on a data and transport growth that we saw here and how that might look in the back half of the year inside of the legacy properties?.

Yeah, I think it's a continued demonstration of our video strategy in moving, leading with broadband, moving video to over-the-top and so we had a good second quarter, good promos and I think while it's a bit seasonal and maybe a little bit lighter in the third quarter, I think we feel pretty good about the position we're in..

Thanks Bob..

And our next question comes from Barry Sine from Drexel Hamilton. Your line is open..

First welcome aboard Lisa, I remember you were at FairPoint before they even bought Verizon so that's a -- I'm glad to hear that. First question on the $15 million in synergies that you've already achieved.

Where did that come from?.

Barry that's predom -- Steve, do you want to take that?.

Sure, sure Barry. This is Steve, yeah, I think that the $15 million is primarily, as you would expect, the elimination of a duplicate executive team and several positions that were also duplicated across the company. So, I just think that would be normal sort of stuff that you would expect.

In addition, there's some non-headcount related issues in there that public company stuff going away, things like that..

Okay. And then on the expectations in terms of what you're going to do in Northern New England, I wonder if you could -- I have four areas that I'm wondering about. You know, new product offerings, is there anything near-term on the horizon? I know you have the capability.

There are some ex-Fios markets in New Hampshire that you could bring your video up from [a tune]. I know you want to revamp the commercial sales force to make it look like the consolidated model and then the fourth one would be a cutover of the FairPoint brand name to the Consolidated brand name.

What's the timeline on each of those please?.

I'll do my best Barry to give you a feel for the timeline but I probably won't be as explicit as you'd like. The new product activity is already underway and I'll split that across commercial and consumer. On the consumer front it's all about increasing speeds and adding the things to the product portfolio that make it more sticky.

That includes the self-serve portal and our over-the-top video offering. With response to -- and the timeline and the speeds we're going to see progress in that yet this year and through next year and I think it will be actually faster than we originally expected in our modeling.

With respect to the Fios markets, that's really just the Southern New Hampshire area and there's already someone gig capability there that will expand. There's about 110,000 fiber passing's and we've got some process work there to shore up but the hard work is done.

The network is there, the capability is there and we've got to get the marketing engine and the provisioning process so that it works efficiently and we can see line of site on how to do that. With respect to bringing our -- and I'll come back to commercial in a moment.

With respect to bringing our video product there, you know, that's an analysis right now.

It's just with the CapEx associated with the set-top box and the cost of the content, it's not something we're anxious to expand but we're looking at how short a putt it might be and does it give us a quick win? So we're definitely going to analyze it, and when we do as you know, have an ability to port the content across the country; we've proven that.

So that's still in an analysis and not something that we've decided to do for sure.

And just an add, we've got a DirecTV compliment that FairPoint had developed and that's working quite well and so we look at that in our product portfolio as something that helps solve the broadcast video component without having to do the work of getting in the video content game on a broadcast basis.

So, going back to the commercial, we really have the foundation of a Metro Ethernet offering there. We're in the process now of queuing up the Cloud service product rollout for later this year so that we can hit the ground running in early 2018.

There's some great sales resources in the FairPoint property, there's roughly 30 and we're doing some consolidated ramping of those sales resources looking at some management beef-up there and really on the product side trying to standardize the Metro Ethernet from a process and delivery because to this point those installs have been primarily individual case-based and project managed and we need to be able to scale that and so we've got the playbook to implement, it's a matter of getting through the blocking and tackling which I don't think is going to be any -- a multiyear deal but I think it will take a couple of quarters to get that engine working.

And last year, lastly regarding the brand, I think that's really an early next year change.

You know, as we talk to the employees and there was some desire to become one company, they're anxious to become part of the Consolidated family, I was cautious about we need to be able to deliver value for customers as we change the brand so that it's a good news story and so we're building our plans around that concept as we can deliver new functionality, new products, reduced customer pain points, we'll do the brand change and we think the timing will be right in the first quarterly, roughly in 2018..

That's really thorough. Just one follow-up on that. In terms of bringing faster bandwidth speeds to consumers, I know there's an extensive fiber network in Northern New England and I know you're predominantly serving most of those households with copper.

I'm assuming this solution will be some type of a hybrid bringing a DSLAM node into a neighborhood and then shortening the copper loop lengths.

What are you doing physically to achieve that?.

Yeah, you've got the concept right but they're further along than you might have imagined or they were than we imagined.

CAF 2, the Connect America Fund Projects have helped some but the real opportunity is in the suburban and some of the not so rural areas where they actually have over 30% of their footprint and get 20 meg today and 15 meg is possible in over 60% of their addressable market with 10 meg in over 70%.

So that's an indication that, and we've validated this, that the nodes are already there, they just have old electronics in them in some cases.

And so some of the -- just to give you an anecdotal story as an example, some of the examples that technicians gave me, gave us, in the meetings were they're doing a lot of work, a pair bond, to get to 10 meg when a shelf change will allow them to get upwards of 50 meg with the same effort.

And so we've got those projects identified, we're very excited to implement and they're being prioritized in this quarter with some of them already started. So it's going to be not as long of a putt but it will take time..

And my last question I guess for Steve.

If you could give us a snapshot of the new balance sheet as it stands today, specifically on what's the composition and then total debt and then what are the interest drivers, what's the blended interest cost and what's a good run rate interest expense to think about for the company?.

So Barry I think maybe just to highlight that. On the Consolidated side we had the $900 million in term debt basically 3% coupon, 1% LIBOR.

That and we also were really pleased with the refi that we did on the FairPoint debt, $935 million at exactly the same terms, which as you know from covering FairPoint, their cost of debt was almost 8% on what they were carrying so we were really pleased that we were able to cut that in half and on similar terms with what we have.

So you've got $1.8 billion in term debt at 4% and obviously that was a little bit with LIBOR and then we have $500 million of senior notes at 6.5% that were put in place, partly for Enventis and partly taking out the high coupon notes that we had from the SureWest days.

So you aggregate that, you're probably at a blended interest rate cost of something less than 5% and as we head to that, you might get close to 5%. There aren't any maturities until 2022 on the notes and then the term debt is 2023. So I think we're in great shape relative to the overall cost of debt as well as maturity towers for that debt.

And [Indiscernible] for the $1.8 billion in debt has, our bank secured term debt, has basically a 1% amortization on pre-payments, mandatory payments..

Got it all, that's very thorough, thank you Steve and thank you everyone..

You're welcome, thanks..

And our next question comes from Jon Charbonneau from Cowen. Your line is open..

Great, thanks for taking the questions. In terms of FairPoint, it looks like their revenue in the second quarter was down roughly 3.5% year-over-year. How do you recommend we think about the revenue trends for FairPoint over the next couple of quarters as you continue to integrate the company and then just more of a housekeeping question.

The other segment within your commercial and carrier segment, it looks like it ticked up a little bit to $4.9 million this quarter, what caused the increase? Thank you..

So Jon, this is Steve and I'll try to take your questions there. On the last part on the tick up and other in commercial and carrier, that is, again, year-over-year, CTC is in there. They had a table structure business accounts for $700,000 or $800,000 or whatever and then we also had one large CPE equipment sale that's in there.

So there's a little bit -- there's more of that to be recognized but that kind of stood out in the quarter year-over-year. And then going back to your first question I'm thinking about FairPoint.

They were down, again, we're not taking responsibility for their numbers since we didn't own the business for second quarter but what we know, the quarter-over-quarter was a little bit of a regulatory true-up I think in the first quarter and I would think from a modeling perspective, you would kind of look at their last -- you know, basically 4% down for what they were trending and then it's going to take us -- even though we have a lot of fast start initiatives, it will take us a while to get on the ground and start impacting that number.

So I would kind of look at normal trend rates for what they've done the last couple of years, wherever you think the business is and then just give us some time to implement our marketing and product strategies..

Great, thank you..

And our next question comes from Jennifer Fritzsche from Wells Fargo. Your line is open..

Great, thank you for taking the question.

If I could, I wanted -- the Verizon dividend came in a bit higher than we were looking for which is great news but I think there's this view of Verizon as we look into 2018 that their fiber spend might not be fully reflected in their CapEx numbers which has the trickledown effect of what that could mean for that distribution looking out; just some general thoughts there? And a bigger question, bigger picture question if I may, today is an interesting day reporting with other Arlex, some of which have backed away from it and into the dividend.

I guess I heard the prepared script, certainly the commitment to the dividend, but I guess Bob for you how do you think of the Arlex sector right now? I mean, I think it begs the question of what is an Arlex these days since you're all taking different strategies, but if I could just pick your brain there? Thanks..

Hey Jennifer, this is Steve so thanks for the questions. I'll take the first part and Bob can think about the high level strategy question there while I'm talking.

So with respect to the Verizon Wireless distributions, yes, so they did ramp up in the second quarter and weeks and we have visibility to third quarter distributions and we expect those to be up 10% to 12% over Q2.

So the last half of the year distributions generally are always high, I mean historically, are higher than what they have been for the first half. And, again, last year we did get a little bit surprised at their CapEx then in the fourth quarter around primarily Houston Super Bowl and something going on at [one of the PA], SMSA.

So we don't have a lot of visibility yet for fourth quarter but compared to their budgets, expectations, we sort of expect to be on a trend-line that we've demonstrated for the rest of 2017.

To your question right now we do not have visibility to what's going on in 2018 so we will have access or visibility to their budgets for the five partnerships that we belong to.

You know, we still think we're on the right side of the dividend policy within Verizon as they have to dividend money up to support the overall Verizon strategic initiatives.

So, you might see some fluctuations based on what they need to do in their business but we're still pretty confident that we will have substantial cash distributions coming from Verizon over time..

And Steve if I may just a clarification point, each of those five JV's has its own dedicated board of which you have a seat and therefore a say on, correct?.

Correct but as you know, we are limited partners, right? So we have access to a lot of information and can voice our opinions but we own anywhere from 2% to 20% of those individual partnerships..

Great, thank you..

Jennifer, with reference to the larger strategy question. We have conviction in being predictable and the benefit of the portfolio of geographies and customer groups that we operate across gives us a lot of insulation from sector or geographical economic trends.

The only thing we've seen that has been a bit of a surprise has been the bandwidth price compression but we're working through that and it's creating an opportunity to extend contracts and grab some more sites. So we'll get on the other side of that.

But the business is an exciting front for us especially with the disciplined approach we've taken to acquisitions, buying them at the right time for us and the right time for them and so that position has put us in a situation where we feel very confident in the dividend, I'm going to enjoy being able to say we've done it for 50 quarters in a row and then, you know, subsequent quarters after that but that's obviously a board decision and yet we influence that by our ability to put up the results.

And so we've been very fortunate to get into another situation where we can invest in a property, bring our playbook, build more cash, get on the other side in a couple years of this pressure from the Connect America Fund transition where we're one of the few because we've done it correctly and we're losing some funding, the pressure on access driving more of our revenue to the commercial and carrier and broadband base and so I see a fiber-based long-term sustainable future that isn't building value just on terminal multiples but building value on sustained cash flow generation.

So that has to differentiate us at some point and all I can do is make sure that we keep executing on that strategy..

Thank you very much..

And at this time I'm showing no further questions..

Okay, well thank you and thank you for the questions and thanks for joining us today. We are very excited about our business and the opportunities we have to improve value for our customers, employees and shareholders. I look forward to sharing our progress on the FairPoint integration and our third quarter results.

Until then, thank you and have a great day..

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