Lisa Hood - Vice President and Treasurer Bob Udell - President and Chief Executive Officer Steve Childers - Chief Financial Officer.

Jon Charbonneau - Cowen & Company Scott Goldman - Jefferies Michael Rollins - Citi Investments Barry Sine - Drexel Hamilton Frank Louthan - Raymond James Jennifer Fritzsche - Wells Fargo.

Good morning, ladies and gentlemen and welcome to the Consolidated Communications Holdings Third Quarter 2017 Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Ms. Lisa Hood, Vice President and Treasurer. Ma’am, you may begin..

Thank you and good morning everyone. We appreciate you joining us today for our third quarter earnings call. On the call with me today are Bob Udell, President and Chief Executive Officer and Steve Childers, Chief Financial Officer. After our prepared remarks, we will open the call up 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 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 their nearest GAAP equivalents. With that, I will turn the call over to Bob Udell..

Thank you, Lisa. Good morning, everyone and thank you for joining Consolidated Communications third quarter call. I want to begin by announcing our Board has declared our 50th consecutive quarterly dividend payment to our shareholders. This demonstrates our commitment to the dividend as a predictable return of value to our investors.

One of the financial benefits of the business combination with FairPoint was, of course, an improvement in our dividend coverage ratio. With the operations of the combined companies included in the third quarter, our payout ratio was 57.4%.

Since we closed on our acquisition of FairPoint on July 3, we have been focused on fast start initiatives and integration activities. One of the key initiatives, of course, is to achieve our target synergies of $55 million within 2 years of closing.

We are off to a good start and as of the end of the third quarter, we have recognized over $20 million in cumulative run-rate synergies, which is right on plan. As we have done in the past with acquisitions, we have a disciplined approach to integration with projects prioritized based on synergy and customer impact.

We have identified and resourced 30 high-value projects, which include the transition into a common ERP financial reporting platform at year end as well as projects that will increase availability of broadband speeds and reduce customer pain points.

In addition, these projects are facilitating collaboration among the employees within our expanded teams. We are committed to leveraging our playbook, build around our 3C strategy of carrier, commercial and consumer customer groups.

For consumer, we have already seen a reduction in call center wait times, streamline seasonal service reconnects and are in the process of reducing the time from order to install. We have identified the commercial sales leadership in the Northern New England markets and have a fast-paced product development schedule for the next three quarters.

As we have said in the past, Consolidated has a proven track record of successful integrations and I am confident our team will be equally successful with the integration of FairPoint.

As many of you are aware, Texas and Florida experienced significant weather events during the quarter with Hurricane Harvey in the Houston area at the end of August and Hurricane Irma impacting Florida in early September. Due to the resiliency of our network and employees, our customers’ experienced only minor service disruptions during these storms.

Our team’s emergency preparation and response was outstanding. Through our advanced network management, we were able to backup sites, which took on water, prefab the affected wrecks, including software loads and rapidly deploy them as soon as our technicians could safely access the affected sites.

I want to take this opportunity to commend our team of skilled employees and pass on my sincere thanks to their work in preparing for the storms and for their support of our post-storm recovery. Now, let me turn to the third quarter results.

First, with commercial channel, Ethernet services revenues are up 8.9% for legacy Consolidated and 1.8% for the FairPoint markets, which takes our combined growth to 3.8%. Year-over-year, combined growth in the Ethernet service revenues was 10.2%.

This includes the turn up of a 34 site medical service network in Texas, which is providing a private Ethernet network solution with gigabit capacity to be utilized for telemedicine. This growth is partially being offset of course by declining revenues for voice services.

Our sales teams continue to focus on expanding wallet share of our existing customers and opening more doors of prospects through solutions based selling. In addition, we are leveraging our cloud services as a way of helping our target customers, solve real business problems.

As a result, we are seeing consistent growth in Ethernet-enabled cloud services, such as Cloud voice, managed and secured WiFi and disaster recovery solutions. Turning to our carrier channel, we experienced solid sales results during the quarter and continue to see some activity associated with power contracts.

During the quarter, we sold 42 new towers and upgraded bandwidth on another 87, bringing our total connected towers to 2,600. RFP activity and active dialog continues with carriers as they consider small cell and dark fiber solutions.

While sales are stronger than in prior quarters, we continue to experience price compression on contract renewals due to increased competition from other fiber providers. Within our consumer channel increasing speeds and taking customers to higher bandwidth services increases revenue and improves overall customer retention.

For legacy Consolidated, 96% of broadband-capable homes can subscribe to a 20 meg or higher plans and 42% can get 100 meg or more. In contrast for FairPoint, only 38% of broadband-capable homes can get 20 meg or higher and only 1% can get above 100 meg. I mentioned that we have several near-term projects to the former FairPoint geographies.

One of those efforts is a plan to extend the CCI speed availability growth plan into Northern New England. We are implementing technologies similar to what we use in the legacy CCI markets to grow this percentage.

And we are also redefining the go-to-market strategy in the areas with greater speed availability to increase the average connection speed for the FairPoint legacy customers. Increasing broadband speeds will continue to be a priority.

Faster broadband over quality network is key to layering on additional value-added services such as over-the-top video offerings. In September, we announced the launch of HBO NOW. This offering is the third over-the-top video product in the portfolio and certainly not the last.

We believe over-the-top video offerings and partnerships complement our strategy to grow broadband and provide an exceptional in-home experience afforded by our unified portal that makes access to our services easier for our consumer and customers. On a combined basis, approximately 74% of our total revenue is from business and broadband.

We expect this percentage to increase as we continue targeted network investments, which deliver high bandwidth services over fiber infrastructure.

And I will remind you that is something that we have proven as our historical pre-FairPoint percentage of broadband and business was 82%, and we expect to increase this percentage as we have in past acquisitions.

The financial benefits associated with the FairPoint acquisition in the form of cost savings and reduced financial leverage are being realized. We will continue to focus on execution of our integration and strategic initiatives to allow us to expand broadband availability and speeds across our combined footprint.

Now, I will turn the call over to Steve for the financial review.

Steve?.

Thanks Bob. Good morning to everyone. This morning I will review our third quarter results, which include a full quarter of FairPoint operational results compared with the pro forma financial results for the same quarter of last year.

Operating revenues for the quarter were $363.3 million, down $16.7 million compared to adjusted revenue of $380 million a year ago after excluding $18.7 million of revenues associated with the 2016 divestitures of the equipment sales and IT service business and the Iowa ILEC.

Consumer revenue was down $5.4 million after adjusting for the sale of Iowa. Voice services were down $6.3 million or 10% with 75% of that coming from FairPoint. In the aggregate, consumer broadband increased $1 million due to higher ARPU associated with customers moving to higher bandwidth services.

However, consumer broadband increases are being partially offset by managed churn in low-margin digital video services, primarily on a consolidating side as we focus on our over-the-top video broadband strategy. In the quarter, commercial and carrier revenue decreased $3.6 million to $153.3 million.

Again, voice services revenue were down $5.1 million, while data and transport stayed flat. Other commercial revenue increased $1.5 million. Our carrier channel remains impacted by price compression, while commercial revenues remained flat. Subsidies and access revenue adjusted to the sale of Iowa ILEC were down $7.3 million.

Subsidies were impacted by the third quarter of 2017 step down of CAF II funding by approximately $2 million. Network access continues to decline due to reductions in rates associated with switched access and reductions of intercarrier compensation rates.

Operating expenses, exclusive depreciation, amortization, post-retirement and pension benefits were $238.2 million compared to $251.7 million for the same quarter last year, again after adjusting for $15.1 million associated with the divestitures of the EIS business and the Iowa ILEC, the remaining year-over-year decline of $13.5 million is due to the realization of deal synergies as well as salary savings associated with employees, who left the business since the third quarter of 2016.

These savings are partially offset by $1 million in one-time cost associated with the early termination fees of approximately $680,000 to exit a lease on a data center facility in Texas. We also incurred a little over $300,000 in storm recovery expenses associated with the hurricanes.

Other post-retirement and pension expense increased $68.7 million year-over-year. In the third quarter of 2016, FairPoint recognized $69.2 million non-cash benefit for the change in liability of the OPEB plan due to the elimination of the post-employment health benefits for active Union employees.

This change occurred in conjunction with the renegotiation on the Union contract for Northern New England employees during 2015. As a result of the new contract, FairPoint reduced OPEB liabilities by over $600 million and had fully amortized that non-cash benefit and the income by the end of 2016.

Net interest expense for the quarter was $30.1 million compared to $29.4 million in the third quarter of 2016. As a reminder, one of the financial benefits to the FairPoint acquisition was the successful refinancing of their debt that we did last December.

We are able to finance the deal under our existing term loan facility at very attractive rates and terms and this has resulted in significant annual cash cost savings. Other income, net was $9.6 million compared to $8.5 million in the third quarter of 2016. Cash distributions from our wireless partnerships were $8.6 million in both quarters.

Weighing all these factors and adjusting for certain items as outlined in a table on our press release, adjusted net income was $270,000 in the third quarter and adjusted net income per share was zero, which compares to $8.2 million and $0.15 per share for the same period 2016.

Net income per share has been impacted by increased depreciation and amortization associated with the purchase of FairPoint as assets and certain intangibles have been revalued. We estimate the 2017 third quarter earnings per share is being impacted by approximately $0.09 on an after-tax basis for these changes in depreciation and amortization.

Adjusted EBITDA was $137.4 million in the third quarter compared to $143.8 million a year ago. The year-over-year decline is due to the divestitures of EIS and the Iowa ILEC as well as the loss of high margin voice and related services which are being partially offset by business and broadband revenue.

As previously discussed, we are offsetting the revenue pressure with lower expenses and synergy realization. In the quarter, we invested $61.2 million in capital or 17% of revenue back into the business. We continue to target success-based opportunities with a focus on fiber deployments.

Our capital investments have to meet our internal paybacks and return thresholds. From a liquidity standpoint, we entered the quarter with approximately $23.3 million in cash on hand and $92 million available under our revolver. For the third quarter, our total net leverage ratio on a pro forma basis was 4.28x.

Additionally giving the effects of targeted $55 million in synergies that we anticipate will be realized within the first 2 years of closing, our net pro forma leverage would be approximately 3.93x. Cash available to dividends was $47.8 million resulting in a dividend payout ratio of 57.4% 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 benefit of synergies, significantly improve financing terms and the tax yield under net operating losses.

Our Board of Directors has declared the 50th consecutive quarterly dividend of approximately $0.39 per common share payable on February 1 to shareholders of record on January 15.

Today, we are reaffirming our full year 2017 guidance as updated and for the second quarter, which include FairPoint, as if we are closing the transaction on January 1, 2017. Please reference the table in our earnings release for our 2017 guidance. With that, I will now turn the call back over to Bob for closing remarks..

Thank you, Steve. In summary, I am confident in our ability to execute on our strategy and to effectively integrate the FairPoint operations.

There have been no surprises associated with the transaction and we are even more excited about the business combination, which strengthens our cash flows, provides for increased capital flexibility and significantly expands our fiber footprint.

We are committed to delivering value to our shareholders through our longstanding dividend and we are focused on building an even stronger and more competitive business. Thank you for taking the time to join our call today. We will now take questions.

Operator?.

Thank you. [Operator Instructions] Our first question comes from the line of Jon Charbonneau with Cowen & Company. Your line is open..

Great. Thanks for taking the questions. Previously I believed it was your goal to grow your commercial and carrier business roughly 3% year-over-year.

How should we be thinking about that now with FairPoint? And I appreciate you are not providing guidance for 2018, but broadly speaking, how do you recommend we think about the growth within that business or segment over the next couple quarters? Thank you..

Yes, good morning, Jon. If you look at the price compression that we are experiencing on the carrier front, what we are really doing is trading out some squeeze on price due to the unlimited price wars. I think the wireless players are in the midst of we are trading out some price per site for longer terms and more bandwidth growth.

So, when you look at it in the aggregate, we still have contracts to work through that provide us opportunities for more sites and I think that we are looking still to grow that revenue line, but it’s going to be temporary for the next few quarters based on the re-write still of some of those contracts.

And some of the private equity-backed players that have entered that space that are competing aggressively based on a view of building customers and a multiple that can flip the business, we are going to price match and that’s spreading a bit into the enterprise space on the commercial front.

So, we are being careful when we compete for that business, but we are in this for the long-haul and we are continuing to expand our fiber footprint. So, we think we can do a great job of offsetting those areas where we have to get more competitive on price by growing our footprint.

So, it’s not going to be in the next year, the 3% growth that we had hoped for. It’s going to be tempered a bit, but give us a quarter here and we think we will have more guidance..

Hey, Jon, this is Steve. If I can just pile on, maybe help you with third quarter results. As you think about the overall commercial and carrier number for the quarter, if you think about – just look at Consolidated versus FairPoint, over 90% of the down – the $2.6 million that we were down for the quarter came from the FairPoint site.

On the legacy Consolidated site, we would have shown about a 1.5% increase in data and transport and we are up in other where on the FairPoint side, we are just a little bit negative on data and transport and down in voice.

So, I think as Bob said, we are not quite hitting the numbers that we wanted on growth in commercial and carrier, but I think legacy Consolidated is holding in there and we have tremendous opportunity on the FairPoint side..

Great. Thank you..

And our next question is from the line of Scott Goldman with Jefferies. Your line is open..

Hi, thanks for taking the questions. Good morning. I guess a couple of questions. On the consumer side, Bob, you mentioned where the speeds are in the FairPoint markets today, you know only 1% did 100 meg, 38% did 20 meg.

Wondering if you could share with us sort of where you think those speeds need to go and how quickly you think you can get there on that front? And then secondly just maybe a little two-parter on the commercial and carrier, maybe Bob, just update us on the progress you have in terms of increasing the fiber connectivity, I think that was one of the priority that you wanted to do in those Northeast markets to leverage fiber for increased connectivity to buildings? And then just housekeeping for Steve, the other in commercial and carrier being up, what drives that? Is that CPE or project revenue or something else we should be thinking about? Thanks..

Yes. Scott, I will start with the last question and Bob can gather his thoughts for the other multi-parters there.

So, on the other areas of combination that both companies have a little bit of a CPE business plus maybe some make-ready for different contracts, so that number, hearing about data and transport that’s all about building and recurring revenue base.

The other is primarily probably 75% of that’s one-time projects and so if that number was going to bounce around a little bit, but you are exactly right, it’s a little bit of equipment, a little bit of make-ready on the FairPoint side..

Yes.

Regarding the consumer, if you look at the legacy CCI, we have had a 65% increase in the 30 meg and higher customers over copper quarter-over-quarter using VDSL2 plus type technology and we are 100 days into operating this deal and really are just starting to promote the areas in the FairPoint area – in the FairPoint markets that already have 50 meg or higher available.

Our focus is in getting to 100 meg and is running places as we can, as fast as possible.

We are still building out some of the QuickStart Capital investment plans to accomplish that, but it’s going to be a progressive quarter-over-quarter increase in some cases first of the 50 meg product, then an 80 meg product based on where speeds are available and eventually getting to 100 meg.

And so, you will see that number in the FairPoint markets continue to grow, but initially, we have some upside where – and the old files passing a gig product hasn’t been exploited or marketed. So even at 15 meg speeds, there is many customers.

There is still 3 and 6 that have upgrade potential, so feel really good about the opportunity there before right now and building block stage of getting the call centers and the machine of provisioning an implementation ready for those promos.

So, it’s still early, we haven’t started that promotional process even in the places where we can get 15 meg and higher, but you will see us deploy facilities, especially the VDSL2+ cards, as well as some additional fiber expansions to upgrade speeds through 2018 and beyond. On the commercial front, give me again your question, so I don’t miss it..

Yes.

I know, you mentioned in the past about wanting to increase fiber connectivity, leveraging the fiber that FairPoint had in the Northeast market, just wondering how quickly some of that activity can take place or how you see that rolling out of the next three, four quarters?.

Well, I think we will be able to move the consumer need a little bit faster than the carrier and commercial on the FairPoint front because of the marketing and the ease of those transactions. On the commercial front, we have actually initiated some activity around the Metro Ethernet.

The pricing was uncompetitive in the FairPoint markets and we have reset it consistent with the way Consolidated markets that product and that’s picking up some momentum. In terms of building past, buildings past, with buildings that’s actually part of the fast-start plan and overlays with the consumer opportunity.

So, those are just getting started, I can’t say that we have had a meaningful impact yet on additional lit buildings past, but that’s probably not required in order to make a dent on the commercial market because of the opportunity that exist with the fiber footprint that already exists there.

So stay tuned, we will continue to pass more buildings, but there is enough hurdle market opportunity with the existing network there that we are getting organized to attack..

Thank you both..

Our next question comes from the line of Michael Rollins with Citi Investments. Your line is open..

Good morning, Michael..

Sorry. Good morning.

I was wondering if you could talk a bit about the broadband footprint with respect to your competitors in terms of pro forma now with FairPoint, how much cable competition do you see across the footprint? And if you could talk about the investment opportunities, Consolidated has to improve the broadband capabilities in the newly acquired markets? Thanks..

The combined footprint really looks similar. And I guess the one thing I would say in Northern New England markets, while they have the similar cable competitors of Comcast, Charter, MetroCast, some various unique players in Vermont, it’s not too dissimilar than rest of our Consolidated markets.

And in fact, there is probably a little more that have no cable competition, a small percentage in the FairPoint areas than some of our historical legacy Consolidated markets. And we are used to competing with them and have in our 15-year of history of being involved in the video product business.

And the real strategy is to continue to focus on leading with broadband pipe moving people up market with speeds based on the capability we have and so if the playbook that we are very good at on a consumer front and drawing them to an over-the-top product through unified portal.

In terms of the capital investment, we look at first the VDSL2+ that gives us a 100 meg as the first step. That’s in our fast-start mode right now with the areas prioritized, where we can get the biggest bank for the buck that overlays with building passings when we are extending a fiber segment. We are doing a fill-in node for residential coverage.

We are also picking up the business, passings at the same time.

So, it’s like we have done in any other fiber expansion project, it’s a multi-layered approach that starts with [indiscernible] of the opportunities and then a quota assignment for the sales teams both on the consumer and the commercial front and then the build-out with pre-sales as we progress. So there is going to be some capital in fourth quarter.

If you look at our guidance, you’ll see we are going to spend based on our guidance appreciably more capital on fourth quarter as we get the equipment in to make these projects possible. We have got the seasonality of weather in Northern New England that will make some of the fiber placements a little bit more challenging.

So that will pickup again there in the second and third quarter, but we are going to get the electronics in place through the winter to make sure we can get the ground running..

Thanks very much..

Thank you. And our next question comes from the line of Barry Sine with Drexel Hamilton. Your line is open..

Hey, good morning gentlemen.

First of all, now that you have been in Northern New England and known this asset for over a quarter now, could you talk about the consumer perception that you are seeing to the FairPoint brand? And then on a related basis, what is the employee perception they have got and on the one hand be pretty happy that somebody is coming in there and investing in this market and perhaps driving growth? What are you seeing now that you have owned the asset for a while?.

Yes. Thanks, Barry. Let me start with the customer perception. The regulators embraced us I think and the speed of the closing is demonstrative of how anxious they were for a new focus, good or bad FairPoint build-out, first the good, a really robust fiber network.

The bad is it came through a history of some challenged service delivery times with the transition from Verizon and 10 years later the systems work, the machine works, but the stigma of the brand is still there. And so we have got some customer perception upside.

We have gotten an escalations group that I have talked to weekly to keep track of what the trend line is in escalations. We have improved delivery dates in some areas already. The storms that we encountered in the last week in Northern New England will set us back on installs for a week or two, but that’s natural with any weather event.

I feel really good about the upside opportunity we have to win customers’ hearts and minds.

And I will give you an example, we have had a challenge historically at least in legacy FairPoint area on seasonal disconnects and reconnects and customers rather than would temporary suspend service, would disconnect altogether and then have to reconnect and you would lose them. They wouldn’t necessarily come back.

And we have just quickly rushed to market a seasonal temporary disconnect and suspend that allows the customers to self-serve that option and that is already improving workflow and wait times in the call centers.

So little things like that, that we identify as customer pain points we are going to discreetly spread through word of mouth and grassroots, social media and build hopefully a customer anticipation of the brand change that we will pursue in first quarter. On the employee front, I think there is a cautious optimism.

They were excited about the prospects of an operator being their new strategic partner, but we have got the same opportunities and that’s for efficiency and so change brings concern and we are including the employee base in the process, but through different medias, recorded messages, through town halls.

And so the one thing that’s very positive is they are seeing more communication and enrollment of their ideas and feedback on our decisions in the context for those decisions than they have ever seen before.

And so that wave is very positive, but there will always be 1 or 2 employees that go through changes that they don’t like and that’s been the case in Consolidated’s history when you run a company of 1,000 to 4,400 employees now, there is always going to be those that have a situation that isn’t to their liking.

But I would say the trend line is very positive and the relationships with the bargain for employees as well as management, has continued to exceed my expectations in terms of responsiveness and participation..

And then on the tower opportunity, it would seem to me if I look at some of the announcements by the carriers, for example, T-Mobile is building out their broadcast spectrum and going into rural markets.

I think Maine was one of the first ones and then AT&T doing the first net build, it would seem to me that your fiber portfolio not just Northern New England, but in some of your other rural areas is pretty well positioned for some of these opportunities the carriers are talking about.

What’s your sense of optimism and opportunity for your tower business over the next year or two?.

Yes. We are very conservative in our excitement, but I will tell you that there is a lot of activity in that space right now and we want that business. And so we are aggressively pursuing it.

There is more activity in the last couple of months and I would say that next year is going to be – it appears to me next year is going to have more volume of tower activity than what we have seen in 2017 and that brings benefits to the commercial opportunity, because we expand our footprint into Tier 2, Tier 3, Tier 4 smaller towns and end up owning those markets when we build out network.

That’s something we are very good at. So I am optimistic, but I am cautiously optimistic..

And then last question, shifting gears, can you give us any visibility on the Verizon partnership dividend flow going forward?.

Hey, Barry, this is Steve.

And again, I think if you look back, you know the history we, I think had 3, 4 years, we were like $35 million and consistently last year dropped down about $32 million based on some CapEx programs that Verizon had in the Houston market for the Super Bowl in one of the rural markets in Pittsburgh for some LTE kind of upgrades.

So this year, we have had a little bit of overhang coming into the beginning of this year with that CapEx spend, because you remember we are like one quarter behind actually put their P&Ls and CapEx together. So, we are – in the last half of this year will be up compared to the first half of this year.

I think we are still expecting to be sort of in that $32 million to $35 million range.

Maybe this year it’s going to be down a little bit, but as they make investments we are hoping to see and get through some of the unbundled competition if they have and maybe we will see some stabilization on cash flow, but I think it had $31 million, $32 million sort of the low bar on what we are expecting..

Okay. Thank you very much, gentlemen..

And our next question is from Frank Louthan with Raymond James. Your line is open..

Good morning..

I apologize if I covered this.

I am sorry I missed probably the beginning part of the call, but talk to us a little bit about the consumer business at FairPoint and upgrading products there and then what sort of traction are you getting? You have led with more of a data first kind of a strategy in your legacy markets and talk to us how that strategy is going as far as the sort of the traction you are getting and the types of subscribers that you are getting in the market today?.

Yes. Frank, we did comment on that. And let me approach it this way. We are 100 days into the deal and we are really initially focused on blocking and tackling service issues, so that when we turn out the marketing meter, the call centers and the technicians, the field services folks can handle the demand.

And so we haven’t been real aggressive on promotions yet. The first step is that the areas that can get 15 meg and higher today in the FairPoint footprint haven’t been aggressively marketed to.

There has been continue work on expanding the availability of a 25 meg product and we are continuing in the 100,000 plus or minus files passings to build out for a gig capability there. So, there is ample footprint for us to aggressively market to.

And in addition to that, we are bringing our VDSL strategy for exploiting the copper that exists as well as filling nodes from the fiber backbone that’s there to accelerate availability of 50 meg, 80 meg, and 100 meg respectively.

So, it’s going to be timed with the re-branding that will occur in first quarter, but in advance of that as we feel like the field-ups capacity is there prior to the brand launch. We are going to continue some very specific targeted marketing, but we are really in early stages right now.

And I did mention we will see a step up in CapEx in fourth quarter consistent with our guidance to afford the flexibility to expand our marketing as we do the branching..

Okay, thank you.

And to what extent have you seen impact from the Charter re-branding in your territories, you think that’s slowed down a bit or they kind of gotten through the bulk of that in fact a couple of the other – a couple of the other groups? And then can you give us an update looking at being to all the properties, the legacy properties and the FairPoint properties, what percentage of the locations are passed by fiber and coaxial and copper, respectively?.

Let me start with the second part of that first. If you look at the FairPoint market, it’s predominantly copper and the fiber passings are in the – so looking for my notes here, 2%, 3% range. And so in aggregate, it takes our pro forma to roughly 20% fiber in HFC and that has broken down 15% fiber and fibers in HFC and 80% copper.

And remembering that with our copper footprint and legacy Consolidated, we continue to fill in nodes, shorten loop lengths and afford ourselves a 100 meg product over copper.

We see that same opportunity in the FairPoint footprint with the positioning of that fiber network and expect to advance that availability of 50 meg, 80 meg and 100 meg fairly quickly, but we are starting from an 80% copper, 20% hybrid fiber coax mix..

Okay.

And on the re-branding impact?.

Yes. As far as the re-branding, we are really not pulling that trigger until first quarter. And so it’s really a slower evolution of FairPoint operating as a consolidated company and then we will do a flash cut of the brand in first quarter..

Okay, great. Thank you..

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

Great. Thank you for taking the question.

If I could just a bigger picture question that kind of incorporates Mike and Frank’s question on cable, if we look at what’s happened to cable recently, it seems like many feel that, that we are at like the tipping top of the sword in terms of video losses and that they might get more aggressive in protecting that broadband base which might cause what I will call silly promotional behavior in the market.

I guess two parts.

One, are you beginning to see that, I know that’s kind of like Frank’s question, but just bigger picture in either of the Consolidated markets or FairPoint? And then secondly, have you had to do anything, what I will call silly to respond to that? Are you seeing that kind of competitive need to respond to that behavior? And then I had one more..

Okay. And bridging back to Frank’s question now, I think I understand whether he was asking about the charter re-branding. If you look across our cable footprint, we have seen little spikes or rational behavior through history, Kansas City is a good example with Google’s entry and then pullback.

And so we are well prepared to compete with that, with the diversity of our portfolio, because we really compete on a market-by-market specific basis. The playbook is the same, but the levers that can go on a by-market basis are easily adjustable for that specific market condition.

We haven’t seen a very aggressive behavior in Northern New England, because quite frankly, I don’t think they had to be aggressive compared to FairPoint’s positioning, not even having aggressively marketed where they – where we can offer 15 meg or better.

So, I think that with investments they make, which we watch closely, the cable competitors and we are going to continue to check our competitive positioning and make sure we can offer a competitive product and compete effectively as we have in the past, where I think that we continue to be effective is in positioning our dedicated bandwidth product and quality of service that prioritizes voice and video effectively.

And we were in the process of educating the reps and the resources and the technicians, we have deployed new test sets, so that we can do in-home mapping of this WiFi signal strength.

The Northern New England techs are just getting their hands on those this last quarter and that’s starting to become a standard in terms of our service delivery process. So I think we are well positioned. We haven’t seen specific rational behavior in any of the FairPoint markets, but we will watch for that closely and respond appropriately..

Got it. And if I could follow-up one more on Verizon, I realized we don’t know what 2018 will bring. But there is speculation that Verizon is spending pretty aggressively on their own fiber effort.

Of the 5 JVs you have, I think you have boards for each one, is there any indication that, that CapEx in any of those regions might really pickup and therefore affect the free cash flow dividends – for this type of dividend?.

Jennifer, that’s a question, this is Steve, that’s a question we get quite a bit and so it’s right, as you say, right now we don’t have a crystal ball for 2018. We are limited partners on the 5 JVs, 2 in Texas, 3 in PA.

Tom White, our CTO does sit on each one of those partnership boards, so we do have some insight and ongoing dialog with them about what their plans are, particularly related to CapEx spends in those areas.

And right now for the markets that we are in and again it includes the Houston metro area as well as Pittsburgh metro, they have not advertised the big spend and those related to 5G in those particular markets..

Got it. Great, thank you..

Thank you. And I am not showing any further questions. I will turn the call back over to Bob Udell for closing remarks..

We want to thank you for the questions and thank you for joining us for our third quarter. The integration and acquisition of the FairPoint asset is progressing as expected and the opportunities that presents for us are everything that we had hoped and expected to be. We hope you will join us for the next quarter’s call and have a great day..

Ladies and gentlemen, this does conclude the program and you may now disconnect. Everyone have a great day..