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tw telecom inc. (NASDAQ:TWTC)

Q4 2008 Earnings Call Transcript

February 10, 2009 11:00 am ET

Executives

Carole Curtain – VP of IR

Larissa Herda – Chairman, President and CEO

Mark Peters – EVP and CFO

Analysts

Frank Louthan – Raymond James

Tom Seitz – Barclays Capital

Jonathan Schildkraut – Jefferies & Company

Simon Flannery – Morgan Stanley

Donna Jaegers – D.A. Davidson

Michael Funk – Banc of America

Robert Dezego – SunTrust Robinson Humphrey

Mike McCormack – JP Morgan

Michael Rollins – Citi Investment Research

Colby Synesael – CIS Research

Operator

Good morning and welcome to TW Telecom's fourth quarter 2008 conference call. Today's call is being recorded. With us from the company is Chairman, Chief Executive Officer and President, Ms. Larissa Herda; and Executive Vice President and Chief Financial Officer, Mr. Mark Peters.

At this time, I would like turn the call over to Carole Curtain, Vice President of Investor Relations. Please go ahead.

Carole Curtain

Welcome to TW Telecom’s conference call. Let me start by directing you to our website at www.twtelecom.com, where you can find our press release and supplemental quarterly information.

Before we begin, I will read our Safe Harbor statement. Issues discussed on today's conference call include certain forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are naturally subject to uncertainty and changes in circumstances.

Actual results may vary materially from the expectations contained herein due to the risks disclosed in the company's annual and quarterly filings with the SEC; especially the section entitled Risk Factors in our annual report on Form 10-K for the fiscal year ended December 31, 2007 and our supplemental materials posted on our website.

tw telecom Inc. is under no obligation and expressly disclaims any obligation to update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise. In conjunction with SEC regulation G, I want to point out that we will report several financial measures that are non-GAAP including modified EBITDA.

Our non-GAAP measures are not intended to replace our GAAP disclosures, rather they merely are presented to provide additional insight into our performance. Please see our press release and other information posted on our website for more details on these and other matters.

Now I'm pleased to introduce TW Telecom's Chairman, CEO and President, Larissa Herda.

Larissa Herda

Thanks Carol. Hi, everyone and thank you for joining us today. With the economy in recession, we recognized good news this year. However, our performance does in fact reflect good news and we are proud of it. We substantially grew the business in 2008, despite the headwinds of a challenging economy. We grew net income, further enhanced our liquidity position, and achieved record growth in our levered free cash flow, resulting in our strongest overall financial performance ever. We also achieved a very challenging margin goal.

About two years ago, in a vastly different environment, we set an aggressive goal to grow our EBITDA margin 500 to 600 basis points by the summer of 2008. We not only accomplished this, but we strategically grew into our targeted margin by scaling the business through revenue growth and effective retooling and streamlining of our operation. Rather than blindly and dramatically slashing costs, we were deliberate and thoughtful in ways that would not compromise customer service or future growth. So not only did we take significant costs out of the business, we created a strategic integrated platform of systems, processes, and people while delivering our targeted margins.

As we look to 2009, we recognize the realities the current economic challenges are having on all businesses. But despite these challenges, we see opportunities for our business that others may not in this environment. Customers are continuing to make their network an imperative for running their business. Therefore, with their network as the lifeblood of their company, businesses are faced with the dilemma of addressing ever-increasing bandwidth and applications need, while at the same time managing cost efficiencies. This puts us in a strong position to serve these customers with our innovative and cost-effective solutions.

For 2009, we will focus on leveraging opportunities provided by demand drivers that have previously fuelled our growth, such as a conversion from legacy technology to Ethernet and VPN solutions, as well as new demand that is created from what some refer to as the new telecom economy. We believe this new environment is going to continue to require enormous amounts of metro capacity and network management skills to meet future enterprise needs, which we can capitalize on.

In a moment, I will share with you more on these new opportunities, but first Mark will take you through some comments on 2008 and 2009. Mark?

Mark Peters

Thanks, Larissa. Let me start with our assessment of 2008 and then turn to our view for 2009.

Overall, 2008 was a terrific year for us, especially when considering it was in a tough environment. Summing up the year, we delivered 7% revenue growth, generated positive net income, achieved our target EBITDA margin goal, and impressively grew levered free cash flow; all against the backdrop of a year-long recession. Given the environment, we are pleased with our revenue growth. We continued to grow revenue for the year as sales continued to increase. However, the impact of the economy dampened our revenue growth rate, because of the impact of things like higher churn from segments such as the mortgage industry and small customers as well as others. We also managed our costs well, with about 80% of revenue growth dropping to modified EBITDA for the year. In an environment where cash is king, delivering an 800% improvement in levered free cash flow for the year, demonstrate strong results from our proven business model, even in the tough business climate.

People and network expenses are our largest costs and we have managed both well by being proactive long before the economic cycle was felt by most companies. Managing these costs closely contributed to our strong annual modified EBITDA margin of 34.4% for the full year. In addition, we negotiated the volatile credit markets well by being proactive in managing our cash investments. We have avoided the problems that many others have had in this marketplace and we are clearly in the driver’s seat as it relates to our liquidity. We are in a very strong position with no significant debt maturities before 2013, an undrawn revolver which we continue to view as dry powder, and no finance of that maintenance covenant unless we draw the revolver.

We grew our cash to $352 million by year end, which was invested nearly 100% in treasury money market accounts. Our fully available cash balance gives us the choice of continuing to invest in growing our business, as well as consider other options for our cash. Our long term investors know that we are a conservative team and like to be in a position to weather any storm that comes our way. That approach has put us in an attractive position for what appears to be one of the worst economic environments any of us has ever experienced. For this reason, we have been hesitant to date to use our cash for anything other than reinvesting our business and holding it in reserve.

Now let me touch on a few key trends we saw the fourth quarter. As I mentioned earlier, sales were higher this quarter than in the third quarter and also higher than the same period a year ago. Overall pricing was similar to the last several quarters, as we continue to see pressure on the very low end single site customers and certain of the very large customers. On the products side, very high capacity bandwidth for Internet, representing multiple gates of command remains highly competitive. Overall transport, voice, and Ethernet pricing trends are similar to recent quarters, as competitors remain generally rational. Of course, as customer contracts come up for renewal, we often have to adjust pricing to current levels, but often in conjunction with successfully upselling at the customer at the same time. As we look at customer behavior, decision making continues to take longer, as customers more closely scrutinize their spending and involve more decision makers within their organization.

Revenue churn was 1.2% for the fourth quarter, the same as the third quarter but up from 1% for the same period last year. We saw bad debt expense increase to 1.3% of revenue for the fourth quarter as compared to 0.8% for the same period last year, but still remains relatively low. Likewise, day sales outstanding was 29 days for both the fourth quarter of this year and the same period last year, which is a very good metric as compared to others in our sector.

Now let me turn to some thoughts for 2009. Our focus this year will remain on growing our business by further developing our market, evolving our products and services, and leveraging our embedded customer base. If you think about our choices in 2009, it will be a balancing act of laying revenue opportunities with our costs. Right now, we think that focusing on moving the business forward, despite the environment, is the best strategy for our business. We have never been one to follow the herd and believe our approach of being agile and responsive to the current environment is the best strategic direction for TW Telecom, while we continue to invest in our current and future growth.

Let me add that while we have a tight rein on cost, we do expect to add sales talent throughout the year in concert with market opportunities. This talent will be focused on new customers, as well as upselling and retaining current customers.

We currently expect to invest at a level similar to 2008, with CapEx guidance of $250 million to $275 million, with majority of our capital tied to new sales opportunities. The balance of our investing will be directed to our products and services, especially the expansion of existing collocation facilities, launching our new managed services portfolio, continuing to invest in infrastructure and funding IT projects that enhance our efficiencies and customer experience. Our teams are nimble and we want to strategically position ourselves for when the market does turn around versus waiting to follow the competition. Because success-based capital is tied to new sales and installation, we would expect to spend at or below the lower end of our range of sales trend down and the higher end of sales accelerate. As a reminder, we have always maintained a strong 30% internal rate of return targeted threshold on our new incremental CapEx spending to build on a new customer location. And that is with a signed contract and we are not stepping away from that discipline.

Now let me touch on a few update items for 2009. Similar to prior years, we continue to expect fluctuations in our business, including the timing of sales, installation disconnects, disputes, repricing of contracts and seasonality. As in the past, we expect the first quarter of 2009 will be impacted by historical trends, which include the sequential cost increase due to the resetting of payroll taxes and other employee-related costs. We are estimating a $4 million to $5 million sequential cost increase in the first quarter for these cost impacts.

While sales for the fourth quarter were higher than the same period last year, the timing of installing that revenue and the impact of churn and other fluctuations will determine revenue growth for the first quarter, which is historically a more seasonal or lower growth quarter. In addition, we are expecting some mandated rate reductions for (inaudible) compensation in 2009.

Effective in January and with our first quarter 10-Q, we will implement newly mandated accounting rule FASB Staff Division APB 14-1, the change which impacts all companies that have issued convertible debt instruments similar to ours. The adoption of this rule will impact interest expense and net income, as well as the accounting for our debt and equity on the balance sheet. We estimate 2009 non-cash interest expense will increase $16 million to $18 million for the year. We have featured list with more details in our upcoming 10-K to consider in your updated model.

Let me summarize our view on 2009. We see the company as being in a strong position. We are comfortable that we will continue to produce levered free cash flow for 2009, even as the economic challenges continue. A few reasons for this expectation is – we have a stable, recurring revenue business; we have demonstrated the ability to control costs; the majority of our capital spending is tied directly to new sales, which acts as an automatic governor to our spending, given our ongoing return threshold; and we have a proven business model with a history of making the right decisions in a volatile environment. As we move through 2009, we will continue to focus on balancing all the important aspects of generating cash, investing in the business, while pursuing strong customer opportunities which meet our return threshold. And we will remain nimble to respond to the current economic environment.

With that, I will turn the call back to Larissa.

Larissa Herda

Thanks, Mark. Well, let's face it, it is a tough economy out there and it will probably stay tough for a while. However, we are not going to stand still and use economy as an excuse for not driving the business forward. I want to move the discussion to the future and how we are offensively working to place ourselves in the best strategic position.

As we look at our long-term growth potential, we see terrific opportunity. In fact, with our differentiated metro fiber assets, we are at the center of what we see as a new telecom economy. We believe this new environment is going to continue to require enormous amounts of metro capacity and network management skills to meet future enterprise needs which we are in a great position to serve. I think it is important to remember customers are continuing to make their networks an imperative for running their business. Therefore, with their networks as a pass to the future of their companies, businesses are faced with balancing increasing bandwidth and applications needs, while at the same time, delivering cost efficiencies and that has never been more important than now. We believe the solutions for these enterprise challenges will include network-based solutions that will drive the need for metro capacity and network management skills creating ongoing demand for our Ethernet and IP services. Data and Internet revenue continues to be our growth engine and we are looking to further leverage that foundation.

Let me touch on the drivers that we have benefited from in the past and continue today. These include first, the conversion from legacy technologies to new Ethernet and VPN solutions; and it is important to understand that this is still an imperative for business customers today as that transition is not nearly complete. Second, ramification by enterprises to leverage the Internet for their operational needs, and we believe this trend has been accelerating, I know it has been for our business. Third, our disaster recovery and business continuity needs, including network connectivity for private enterprise data centers, third-party data centers, and carrier locations. And we are clearly seeing ongoing opportunities to our co-location demand, which pulls through considerable network revenue. And finally, convergence, which is the task of designing and combining voice, data, and Internet networks into one converged platform. And we see enterprises, as a whole, as just being in the early stages of full convergence. When you put it all together these demand drivers still exist that we believe will continue to drive growth for some time to come, in fact all of this network investment by enterprises in data center capabilities and smarter networks is leading to the evolution of some new demand drivers, including for instance, cloud computing. Without data center investment converged networks businesses wouldn’t even attempt cloud computing.

And then there is green IT initiatives and telepresence and things like managed services. What's interesting is that all of these drivers are intertwined, not all of these drivers are going to have the same impact, but we believe the combination of this demand will be profound on the need for network capacity. So let me touch briefly on each of these to help you understand how they drive the need from metro-capacity and network management skills, as well as how we are positioned to win the business.

Let me start with cloud computing, which is a fairly broad and evolving concept that is quickly developing – that is developing quickly. On a fundamental level, businesses today are looking to leverage the Internet by storing applications centrally versus on the desktop to reduce their overall cost structure. However, what is of interest to us is the movement to outsource and store more and more applications outside the enterprise infrastructure, which is where cloud computing comes in. Cloud computing is the notion of enterprises leveraging the Internet in the same way, yet storing their critical applications with third parties, thus creating bandwidth demand to move that data. Today this is done via the public Internet, which we do participate in by providing Internet service; however, as the demand for these services grow we believe enterprises will migrate to more secure, scalable, and reliable networking infrastructure in the future, meaning that businesses will use Ethernet and quality of service enabled IP VPN, which is even more compelling for our business.

Here’s some reasons why we are excited about the prospects of this application. As enterprises continue to leverage third parties for hosting applications such as software delivered as a service, or storage on demand, this will drive bandwidth. One dynamic that's drawing enterprises to this concept of the ability to consume these services on demand, that means the business can buy on a pay-as-you-go basis versus paying big upfront license fees with ongoing expenses and commitments. This lowers the barrier to deploying applications across the business. So, more companies can take advantage of large economies of scale. This all means increasing bandwidth demand, which of course we love.

So net-net, we think with networks playing more and more integral role to enable enterprise operations, applications like cloud computing will only further evolve. In fact, industry analyst Gartner believes that cloud computing will reach broad enterprise adoption over the next 2 to 5 years. The good news is that our networks and our product capabilities are well positioned to enable bandwidth for these cloud based needs.

So, next let's talk about green IT initiatives, which are receiving tremendous amount of attention across enterprises large and small. When you think about green IT you generally think about how to cut power costs and eliminate hazardous waves, but it is also about optimizing computing infrastructure. Green IT means doing business in a new and different way. It means collaborating across the enterprise and leveraging the network for applications like Web conferencing to increase productivity and decrease project timeline, which require high-quality, very scalable Ethernet and IP bandwidth, again an area of expertise where we can enable efficient applications by providing the bandwidth that enterprises need. Another reason demand driver includes businesses that are implementing telepresence and videos solutions to eliminate travel, something many enterprises are focused on to reduce expenses and gain productivity these days.

For those of you who are not familiar with telepresence, it's much more advanced than simple video teleconferencing in that it uses technology from screen design and enhancements to voice, motions, and other features to give the feeling of being truly present in one location with other participants. This technology drives the sharing of information in both directions via a network connection. Most importantly, for tw telecom adoption of telepresence by businesses also means the implementation of new Ethernet bandwidth and lots of it. The typically three-screen telepresence room requires a minimum of 15 megabit of dedicated Ethernet bandwidth. That's above and beyond what the enterprise requires for all of their other computing infrastructure. You can't really deliver that kind of bandwidth over copper or special access, you have to have a fiber network including at the metro connection level capable of delivering very scalable IP and Ethernet bandwidth with quality of service something that is a core competency, particularly telecom.

Finally let me talk on managed services, which is a catch all term for a variety of different offerings. So, let me tell you what it means to us including another service we just announced just last week. Over the past several years, we have deployed several managed services for enterprise customers, for instance, we have a managed firewall service that complements the security strategies our customers have and it’s delivered from our network. Another offering is our managed security service that mitigates denial service attacks targeted on our customers, again managed over the network. Now we are taking the next step by adding a service focused on delivering a fully managed wide area end to end secured network solution that includes a customer end router device. This device is essential for moving to a smart network and complements our MPOS VPN service. It ensures interoperability between the customer’s environment and our network capability. With the growing complexity of networking issues and leaner IT stats, this is something customers want us to do and often is table stakes for many RFPs.

To give you some sense of what that means to our customers, managing the edge router device includes the procurement, configuration, installation, network interoperability, testing and ongoing management of the device, including software and hardware upgrades and configuration updates to name a few. That requires the right skills that we posses and allows customers to outsource the service to us and it creates even secure relationships with our customers. This puts us in a position of offering customers a highly managed network in a one-stop shop. We are laying the foundation for additional services in the future to grow and capture additional share of wallet. The intelligence and capabilities of the router are foundational for a complete suite of next generation applications and services. Going forward, we will target additional converged network application where we are delivering data, Internet, and voice over a single network connection. We are excited about this new service because we believe that the company that controls the edge could enable the applications that customers will deploy in the future providing an even more valuable and closer relationship with the enterprises. And we see it as a path for growth. The bottom line is, as data and IP services will drive and are driving the new telecom economy and will continue to drive our growth. If you cannot support data and IP and do it in a big, very scalable way, with quality of service you are simply not a player with enterprise customers. Industry analysts like Gartner, IDC, Infonetics, and Vertical Systems all highlight the exponential growth rates for metro Ethernet. They are seeing anywhere from 30% to 45% compounded annual growth rates over the next five years to deliver the high capacity bandwidth in fiber based services the enterprise customers need for applications like data center connectivity, storage, and convergence. We are at the center of this new telecom economy. And with these new and emerging applications that are driving the massive amounts of bandwidth.

In closing, let me say that while we are not immune to this economy, we feel good about our market position. Many companies are just focused on the now and clearly we are doing that, but we are also focused on the future. We continue to look for opportunities to serve customer needs and to take market share by providing efficient, scalable solutions with an excellent customer experience.

Let me reiterate some things that position us to build market share, and position us for another long cycle of growth, including proactively managing for the future, our relentless attention to serving enterprise demand and the customer experience, our customer diversification by types of customers, vertical markets, geographic regions and services, our ongoing discipline to invest in growth opportunities with solid return potential and our track record to execute, perform, and generate consistent long term results. We believe these differentiating factors will allow us to continue to win new business and grow.

Thank you, and we will now take your questions.

Question-and-Answer Session

Operator

(Operator instructions) And our first question comes from Frank Louthan from Raymond James. Your line is open.

Frank Louthan – Raymond James

Great, thank you. Can you give us an idea of looking at customers that are coming to you, what percentage are changing off of the TDM based products or some less efficient platforms as they are migrating over to your Ethernet and more efficient platforms? And how is that going to changed? And then looking forward, you obviously going to continue see possibly some revenue pressure and so forth with the economy, do you still feel committed to the internal investment projects that you made over the years? Is that something you might slow down a bit to hold margins in? Thanks.

Larissa Herda

You know Frank, I couldn't give you an exact percentage on what customers are, but it's a significant number of customers, and I would say that the majority of customers are doing that migration, the customers that we are selling to. They didn't have Ethernet before and we are bringing it to them as a brand-new product offering. With regard to our internal initiatives or more strategic initiatives, is that what you're referring to?

Frank Louthan – Raymond James

Yes.

Larissa Herda

Are you talking about things like network expansion, co-location expansion, product expansion?

Frank Louthan – Raymond James

I guess all those things, and various products you talked about, internal projects that you’ve discussed in the past that you’ve invested in, that similar pressure on margins not as obvious to us, but are those kind of things that you are going to continue to see the need to keep investing in it aggressively with the economy where it is and the direction of the top line relative to 12 months ago, or is that something you are going to back off a little bit from, which have some positive margins impact?

Mark Peters

Frank, lot of those investments really are the capital investments and obviously they pull along some costs, we think we have to put in some network that have ongoing costs, and the people associated with implementing them. But we are going to continue this year building out additional co-location space, back in the first quarter we are completing some projects, we commenced in the last year. There is also some network expansion in a couple of markets. So we will keep doing that this year. Now, we actually look at those as a bit of success based, not in our traditional sense of success based. Let me just use few co-location facilities for instance, before we expand space, we frequently have anchored tenant that have already signed contract before, we then go to the next phase and the next phase of our co-location facility. And let’s understand, we are not doing 25,000 square foot build out in these locations. They are generally 5,000 to 10,000 square feet on a high end. So, very, very measured expansion. But having said that, we are taking a closer look at some of those to make sure that the demand is closed in to when we are making those investments. So, the timing might fight a little bit on the project throughout the year. But we are not doing any wholesale pull back on those kind of projects.

Larissa Herda

Keep in mind all those projects are what will drive demand in the future Qs. So, it is important for us to obviously be prudent about ensuring that we are going to get our returns, but also continuing to make investments in the business.

Frank Louthan – Raymond James

Okay, great. Thank you.

Operator

And your next question comes from Tom Seitz from Barclays Capital. Please go ahead.

Tom Seitz – Barclays Capital

Yes, thanks for taking the question. I understand that there is some benefit from seasonality in the customer churn numbers, but the customer churn rate is going down on the lower customer base. So, is it fair to assume that we've seen the peak of the impact from the churn in the Xspedius space? And then second question, where there any significant one timers in cost of service or weird costs, you did a great job on modified EBITDA, but the beat versus our estimate was in G&A versus a bit more of a whip in gross margins. So, if you could elaborate a little bit there.

Larissa Herda

Okay, Tom. So I answer the first question on the churn. I think what you're seeing on the churn is some deliberate efforts on our part to mitigate the, what we would call a more regrettable churn. The unregrettable churn would be that extremely low margin, high cost customer that's generally very small for us. And we are not really suited for that sub $500 customer, $300 customer. And there are still quite a few of those left from the Xspedius acquisition. But however there are customers that ended up inquiring 20,000 customers, and it’s hard to get your arms around every one of them and contact every one of them on an individual basis when you are not adding heads to be able to address those additional customers. We finessed over the course of this year by putting programs in place and using our customer relationship specialists that have been focused on the core customer base. And we put programs in place to have them contact those customers that we have decided where customers that we had some upside potential with and that wanted to make sure we kept. And it was very effective program and you saw some reduced churn there. But we still continue to see the smaller customer churn and we are allowing that to occur, obviously in that churn is probably some bankruptcies too that we don’t know because the customers are quite small and they just disappear and you usually sell when you are porting whether you port the customer out on their voice services if you are not porting chances are they are closing their doors. So, we do see a lot of non-ported customers. So, in general have we seen the peak? I really don't know the answer to that, I think it will ebb and flow. We have – we continue to expand – and we haven’t reached all the customers yet, I mean it is a lot of customers, it is not just you could call them and say, “Hi, how are you,” and have a five minute conversation, there is usually a lot stuff that goes along with it, especially if you are trying to find out what the additional revenue opportunities are, and you want to up-sell them. So, we are going to continue to expand that process over the course of this year, and we are moving, we have been moving heads and adding some heads in that area as we had some significant success obviously it’s easier to keep the revenue – when you keep your revenue it’s a lot less expensive than getting new revenue. So, it is a very core part of our growth strategy this year, is making sure that we limit the churn in our customer base. With that said, I think there is economic factors that are going to continue to impact us. And again, I think on the small business side, it’s probably of a – we are not offering products that really address their needs and so some of those are just moving out of carriers.

Mark Peters

And then I will grab the second question as far as any significant one-type things in the fourth quarter. Not really, this was the fluctuations in any particular quarter. You point out SG&A in particular, and that was 24% of revenue in the fourth quarter and 24% of revenue in the third quarter. So, they are really in the same ballpark. There is timing, commission fluctuate based on when sales get installed because we are pay on installation not on sale. So, that can fluctuate from quarter to quarter, other payroll costs when people come in and go out of the business, and then obviously we saw the increase in bad debt expense as well. So, just really those kind of items puts and takes. There was nothing in particular. And of course the keeping in mind going to the quarter as I mentioned as every year, since we have been talking to you all we expect an increase in costs related to payroll resets and play related in the third quarter.

Tom Seitz – Barclays Capital

Okay, that’s helpful. Thanks. Just real quick, Mark, are volume voice related revenues, did they remain in the 3% to 4% range for the quarter?

Mark Peters

Yes, they are in the same ballpark, yes. Primarily in the voice category. Apart from the intercarrier compensation which we break out separately, but those are in the voice category primarily.

Tom Seitz – Barclays Capital

Thanks.

Mark Peters

You are welcome.

Operator

And we take our next question from Jonathan Schildkraut from Jefferies & Company. Please go ahead.

Jonathan Schildkraut – Jefferies & Company

Great. Thanks for taking my question. Just like a little bit more discussion of the competitive environment, one of the things that you highlighted during your prepared comments was the strength of your model and survivability through the downturn, are you seeing a competitive environment change where perhaps survivability is becoming more a part of the conversation during the sales cycle? And where the strength of your balance sheet in growing cash flow are helpful in the selling process? And then is that becoming a factor against which you can use competitive leverage? Thank you.

Larissa Herda

Without a doubt. We have been actually using that for a quite a few years. We used it during the downturn of the telecom industry in the 2001, 2003 timeframe, and it was very helpful because we were actually in far better shape than many other companies that were out there that eventually went bankrupt. But as far as the competitive environment is concerned, in general, I would say, most competitors who have been fairly rational on this go around unlike they were back in 2001, 2003 time frame, where you were seeing some incredibly irrational behavior, clearly there is always some players that are out there and there is some routes that are out there where there is tremendous amount of competition.

But that generally benefits us on the buy side and we see it more in some of the long haul pieces that will buy. It's just select areas, not prolific. I’d say in general, you know, companies are pretty rational and the services that we sell we just don’t have a whole lot of competitors that can do what we do. We are generally dealing with really big carriers who again are pretty rational, every once in a while a really big mega carrier will do something that’s extraordinary, but it is not very often. Obviously they can’t do that to their overall business. But sometimes I think they do it just to make a point. But overall, we win some, do we lose some based on some competitive pricing? Yes. Sure that always happens.

But we’ve always believe in maintaining the integrity of our pricing structure because once you lower prices as we’ve been seeing in the retail industry it’s very hard to raise them and have people buy. We did that during the downturn in the telecom industry, successfully, did we sacrifice some growth, sure we did but we here and lot of those companies aren’t. So, I would say overall, we really hadn’t seen in the past quarter it’s pretty much the same on the competitive front. We really haven’t seen any changes since we talked to the street last quarter. I think everybody is out there competing to the best of their ability. We feel like we’ve got a little bit more ammunition against some of our competitors, and so we’ve managed to be successful selling against them.

Jonathan Schildkraut – Jefferies & Company

Thanks. In terms of some of the demand drivers that you mentioned, cloud computing, managed services, as well as some of the comments you made about continuing to invest in your data center space. I am wondering for some these new demand drivers if there are things that the company intends to develop internally or to partner with somebody else or to buy technology to serve those markets?

Larissa Herda

Keep in mind, the demand drivers are the things that are driving the capacity need on the network which is what we do. We don’t cloud computing obviously internally we have our own internal green IT imitative. We are not in the market today of selling telepresence. But there are companies that are – and we do partner with other companies around the country that are offering those types of services because there always is an element of network demand that is required for businesses to be able to implement those services.

So for us those demand drivers are more holistically occurring in the market environment that tell us that as companies continue to implement these types of things, we are going to continue to see demand on the network, and it’s inevitable. And companies have to do a lot of these things in order to be competitive because it significantly lowers their cost structure and cloud computing is a perfect example of that. It’s just a big move in that direction, we are seeing it, and we are going to start seeing more of an impact for our data and IP services as that continues to grow.

So for us that what it’s really about, it’s about how – what’s going on in the environment around us and how that impacts the demand on the network. Those are not going away. Obviously, a lot of people are concerned about enterprise customers cutting back because of the economy there are layoffs and certainly that does impact, I mean we have been involved in consolidating spaces for customers and as they shut down locations that’s kind of the overall – that’s happening with enterprise customers no doubt, but at the same time they are depending on their networks more because it also allows them to get more efficient.

I look at ourselves and some of the IT initiatives that we’ve implemented over the past couple of years, it’s one of the reasons why we’ve had flat headcount is because we’ve been able to rely more on the network for a number of things and we haven’t been doing things manually; and it allowed us to really leverage our business more effectively, and that's what businesses are trying to do, and you look at our productivity numbers they’ve significantly increased. This last year we increased revenue 7% and we didn’t add any heads. That’s pretty impressive. So, I think you are going to see more of that and that’s obviously good for our business.

Jonathan Schildkraut – Jefferies & Company

Thank you.

Operator

And our next question comes from Simon Flannery from Morgan Stanley. Please go ahead.

Simon Flannery – Morgan Stanley

Thank you very much. Good morning. To follow up on your comments, specifically on telepresence service, I heard a lot of good things about it, but a lot of people feel like the price points are still pretty challenging. Do you think we are starting to see the adoption of that in a broader scale or is it still something where we need to get more scale of economies to really drive that in, say, ’09 or ’10? And then secondly, could you comment a little bit on some of the trends in the carrier, revenue line item, you certainly are seeing pressure from consolidation. That sort of worked its way through, so could we start to see more stabilization or even improvement there over the next couple of years? Thanks.

Larissa Herda

Okay, let me first answer your carrier question. On the carrier trends, our carrier trends have been fairly stable for years. They slowly, slowly lost revenue, but if you look at last year, our year over year numbers, most of the loss of the revenue was attributable to one particular customer otherwise we would have had growth in carrier for the year, and that was one wireless carrier. With that said, carriers – and I think the other point to understand with carriers is that the carriers, most of them have learned their lesson in making sure that they didn’t have a whole lot of excess capacity hanging out out there.

And that was the lesson that was learned during the telecom downturn when there was a tremendous amount of excess capacity in anticipation of demand that never occurred. So, carriers have been much more just in time with their implementation of bandwidth and have been fairly good I think about improving their networks. So that I think is very promising, if you remember back to the telecom downturn, WorldCom was our largest customer. They were around 13% or 14%, and most of the revenue that we lost from them was not tied to enterprise customers, sure we had some additional churn there. But it was mostly tied to bandwidth that they never put any customer traffic on. So, it was mostly the union [ph] at bandwidth.

And so we saw that over and over again with customers – carrier customers that were reducing the capacity in their network. So, carrier trends are always going to be lumpy. If you have a big disconnect in the beginning of the quarter, it could cause carrier revenue to go down in any particular quarter, but we don’t see any kind of systemic issues like we saw before and we’ve got good relationships with carriers. They are still buying and we hope to keep it fairly stable over the course of this year.

Now with that said, you never know, could some go bankrupt that we never thought off, could certain things happen sure. But right now it is pretty much steady as she goes there. So, on telepresence, IT professionals, CIOs, are using the green IT initiative to lower their travel costs and their various different – reduce their budgets and cut costs, that’s really their reason to buy. So, even if the price points are a little on the high side, there is that cost benefit analysis that’s going on. But the other thing that’s also happening is that there is also deployment of more smaller systems on the telepresence side. So, there is single screens that are being deployed.

And customers are adopting to it. Maybe it will take time, but we see this as a – again, these are longer terms trends that I have been talking about, cloud computing is happening, but having an impact, our network for instances, is going to take some time. But the next move on telepresence is for companies to communicate between companies who have telepresence. So, that’s going to be – that’s going to take again, some time, but vendors and various different businesses, you will start to see that. So, I think you are going to continue to see adoption in that area and I think as time goes on you are going to see it more and more.

Simon Flannery – Morgan Stanley

Okay. Thank you.

Operator

And we will take our next question from Donna Jaegers from D.A. Davidson. Please go ahead.

Donna Jaegers – D.A. Davidson

Hi, maybe just a follow up on Simon’s question about the carrier business. What are you seeing from wireless carriers besides the one that’s been disconnecting a lot of lines, obviously back haul is a huge growth area as these guys add to their 3G network. What do you see on that revenue line?

Larissa Herda

Really nothing new. The wireless carriers continue to want us to connect the cell towers. We are still seeing demands for bandwidth from them. They’ve been consistently fairly good customers. They are looking for the metro fiber connectivity on the ring. So, it’s been fairly steady in that regard. And even the company that’s disconnecting service from us still buys from us in out of region too. They are primarily putting stuff on their networks in region, and that process has been going on for years now.

Donna Jaegers – D.A. Davidson

On the process, do they have much less to groom off of your network?

Larissa Herda

It is a whole lot less than it was a year ago. There is still some left. They don’t seem to be in any – doing anything particularly, deliberately right now. I think it’s more optimization, I think they have bigger fish to fry. So, you are right, there is not a whole lot left for them to really be spending a lot of time on it. But we will still continue to see some disconnects there over time.

Donna Jaegers – D.A. Davidson

Okay. Thanks.

Operator

And our next question comes from Michael Funk from Banc of America. Your line is open.

Michael Funk – Banc of America

Great. Thanks a lot. Historically, you’ve called out some of the regional pressure that you were feeling and even some of the pressure in the verticals that you serve. Just to flip that around this quarter, if you look at some of the economic data points coming out of the largest regions in which you compete, it is clear that you are actually outperforming those regions as a whole. I was wondering if you could call out maybe some of these factors allowing you to do this.

And then second, looking at the CapEx guidance for the year, kind of flat to up relative to 2008. Historically, you’ve called out about 80% of this being success based. Now you are talking about majority of the CapEx being success based. Should I start presume this means more of the 60:40 mix success based versus non, or are we more towards the historic level?

Larissa Herda

Well, Mike, let me see if I can get a better read on what you are looking for on your first question. We did talk about regional pressure and that was occurring last year where we were seeing certain regions like the Midwest, for instance, that was impacted. Interestingly the Midwest seems to be coming out of that funk. And they might be – it may be signaling a trend but it’s too soon to tell. But there if you talk to our regional VP in the Midwest, he would almost sound bullish compared to what was going ion last year. So, I think that’s nice indicator.

But again, who knows what this year will bring. I think a lot of people are hesitant to make predications on 2009. So, when you look at our performance overall – and now you also argue that maybe in Texas, for instance, which is one of regions, maybe the shift is happening there as the oil prices have been collapsing and Texas has been under more pressure. So, it’s kind of shifted around. And overall, across the country obviously we are feeling the impact of the economy just like everybody else. But how are we able to outperform is really the question that you asking.

That’s more of a general question than probably a regional question because we – although we do on a city by city basis, we had different strategies for every market because every market is different. Every market has a different set of competitive factors; it also has different customer bases. So, you look at Minneapolis for instance where it’s the headquarters of a lot corporations, bit corporations, our strategy in that market is quite different than our strategy in Binghamton. And so yet we – we are very deliberate in how we attack the market, each of our markets.

We look at our strengths, our weaknesses, what customers to go after and where we're going to focus our attention and that is what we do. I do find that when we focus on things, we generally succeed at it. So I think that what you see is we have adapted to the changing environment, we have had some markets that – and the Midwest is one of those markets – that was not as focused on certain areas of business as some of our other markets were and as the marketplace changed, they refocused their efforts and they have started to see some traction as a result of that. So really, our success I think is a result of being nimble, listening to what is going on in each of the environments that we are in. There is no one silver bullet that fixes everything in this kind of a business. You really have to be all over the place. You have to really be listening and aware of what is going on in each market from a competitive standpoint. Does that answer your question?

Michael Funk – Banc of America

It does, thank you. And then the comment on CapEx, you know, historically you said over 80% success-based, does it feel it might be lower in 2009? Can you give me a better sense of the success-based versus non-success based in 2009?

Mark Peters

Now I wouldn’t see that kind of 80-20 mix, the 80% being the short to medium term success-based versus other investments really shifting much in 2009. You know, they can maybe lead to that as we spend less CapEx and further lap, building entries for less than that last that top category because we will keep investing in our IT and back-office and front office initiatives to continue driving efficiencies in our business automation and then further enhancing our customer experience. But again, I don't see that as a dramatic shift from where we have been.

Michael Funk – Banc of America

Great, thanks a lot.

Operator

And our next question comes from Robert Dezego from SunTrust Robinson Humphrey. Please go ahead. Robert Dezego, your line is open.

Robert Dezego – SunTrust Robinson Humphrey

Sorry about that. So a quick question on margins. You know you clearly executed well on the cost management side in 2008 and I just wanted to get a feel for how we should think about margins heading into 2009, outside the seasonal impact in the first quarter, but just thinking more bigger picture for the full year, are there more cost savings that can be done here and kind of directionally, because I know you won’t guide to margins, but kind of directionally, where do you see margins trending as we go forward?

Mark Peters

I'm sure I'll give that a shot. And you are right to point out that going into the first quarter with the cost; you know we have some seasonal impacts going into the first quarter. But as we look at kind of holistically looking at overall EBITDA margins in particular, really to get further expansion in the EBITDA margin going to be predicated on a certain amount of topline revenue growth; that is really tied together. Because you know as we go into a new year, we will be granting merit increases to our employees, so that has an impact and other cost increases that are inherent in the business that have to be absorbed with revenue growth. So it is incumbent on a greater revenue growth to expand those margins. So you know, we think that we're in a pretty good place, generating near 35% EBITDA margin for the full year last year. You know, I think if you look around the industry, those are very impressive margins. So even with revenue growth pushing that margin higher, it is not an easy task. So hopefully that kind of gives you a little bit of view without giving us you any particular guidance on EBITDA margins.

Robert Dezego – SunTrust Robinson Humphrey

Right. So if we look back to 2008, and some of the cost cutting initiatives that allowed you to expand margins by over roughly 20 basis points on a 7% revenue growth, is that it, are we done with – was that the major extent of the cost cutting or just a lot of going-forward cost cutting that is out there?

Mark Peters

Let me talk little bit about what we did in 2008. Couple of fronts. One is the efficiencies that we talked about. We have done a lot and we continue to do more as far as automating our processes, all the way from the upfront order – taking the order all the way through the back end provisioning and that helps us to increase the volumes like we did in 2008 without increasing headcount impact or headcount decline throughout the year. So that has allowed us to grow the business and drop more of the revenue growth, at a great percentage obviously the revenue growth to EBITDA. And we will continue doing that and we will continue to reap the benefits of what we have done in 2008.

Also in 2008, we received the benefits of all the network grooming that we have been doing, trailing off from the integration activity that we did in 2007 and starting to get the full-year impact of some of those activities in 2007, we got the full-year benefits in 2008, which contributed to the margin expansion as well as continued network grooming and optimization in 2008. And that will be an ongoing process. We are continually focused on getting better and better in how we manage our – on a particular, we call it offnet components of our network, where we use another carrier’s components to reach our customers. And we are getting better and better in that and that is a conservative goal of ours to keep getting better. So we will see lift from that, you know it gets very incremental over time but we remain focused on that.

Now we have kept our headcounts, one of our largest costs is our employee cost and we that very tight in 2008, not having to do bigger layoffs, but keeps getting more efficient, reducing headcount through attrition, as we got more efficient, we moved folks from one part of our organization to another part to pick up the growth in our data, Ethernet, IP product groups. That gave us some efficiency and contributed to our margin in 2008. You know, we are pretty tight. We will keep being tight on costs and looking for the efficiencies in 2009 but obviously expanding the margin as much as we did in 2007 and 2008 is not something that we can grow at that kind of a clip definitely.

Robert Dezego – SunTrust Robinson Humphrey

Okay, and I have one more as follow up. You have about $350 million cash the balance sheet, limited maturities and projected free cash flow. Can you talk about some potential uses of cash? I know you honestly want to hold onto some of it in this environment, but in discussions as far as dividend stock buybacks and are you seeing anything on the M&A front in this environment related to some strong fiber assets available at attractive prices that kind of figure in your strategy?

Mark Peters

Clearly, like I mentioned, we are taking a pretty defensive position with our cash in this environment, because you see what is going on in the environment as much as we do and the expectations for what is going on with the banks and all those macro environments that we are cautious about. So we will continue taking that defensive position with our cash. Having said that, we continually evaluate on the M&A front, it is hard to – we look at what is out there, sure, again that is something that our history I think will tell you that we have been very cautious on M&A and will remain so but there might be opportunities in the future on that front. As far as using it for other buying back bonds, buying back stock, doing the dividend, we continually evaluate those opportunities, and again our predisposition is going to be more defensive than going down that path.

Robert Dezego – SunTrust Robinson Humphrey

All right. Thank you very much.

Operator

And we will take our next question from Mike McCormack from JP Morgan. Please go ahead.

Mike McCormack – JP Morgan

Hey guys, thanks. Can you give us a sense for sort of the slowdown in revenue that we are seeing, obviously economic-related but is it sort of initially going to be (inaudible) that is being pulled back fairly quickly and then contract renewals sort of get to be more of an issue down the road. Are you seeing sort of a mix of both right now and then secondly, Q1 I think Mark, tends to be a seasonally tougher quarter with fewer sales base during Q4. Can you give us a sense for whether that is tracking to typical seasonal patterns exacerbated by the economy and what we should expect there? Thanks.

Larissa Herda

So usage is fairly flat actually. So we have not seen any – I know some other companies have announced they have seen some reductions in usage that we – it has been very flat for us. So the answer on that one is no that is not resulting in any reduction in revenue. Contract renewals are – obviously companies are being very vigilant and trying to get everything they can. But we usually and I would say most often we end up renewing contracts before they come due, so we have some leverage and we generally upsell customers on new products to create opportunities for us to do it. With that said, while there are some that are more aggressive than others, sure, it depends on where we are, who the customer is, what our initial investment was, I mean, we have obviously made our money. So keeping the customers and keeping that revenue is important. But we are not seeing anything probably more dramatic over the past quarter that we have seen all year in that regard; so pretty much the same in that regard. Did I answer all of your sales questions? I know you had a question of Mark on the days.

Mike McCormack – JP Morgan

Yes, that was all.

Mark Peters

We mentioned the fourth quarter sales really remained steady as we compare it both sequentially and over the prior year. So now again when you think about revenue, then yes, it is the timing of those installations that when they come in, will dictate what the overall impact on the top line revenue and obviously on churn. I am hedging a little bit as we go into the first quarter; I don't want you to hear when we say the fourth quarter has good sales. You know we also have to be cautious as we go into the first quarter with the support we have lower growth quarter for us on the top line. But now I mean in the fourth quarter, sales remained pretty steady.

Mike McCormack – JP Morgan

Great, thanks guys.

Operator

And we will take our next question from Michael Rollins from Citi Investment Research. Please go ahead.

Michael Rollins – Citi Investment Research

Hi, good morning. Two questions. One, can you talk a little bit more in detail about what percent of the revenue growth is coming from existing customers versus new customers. And then secondly, if we think about existing customers, let's just take for example a significant kind of customer for you were to announce a 10% reduction in the workforce effective to that. You know based on your history with a lot of customers, can you give us sort of an understanding of how that would play out over time for you in terms of the sensitivity to the initial voice traffic but then over time, as that customer might look to regroom the network services that they are buying, how that could affect your revenue flow on a fixed flow each month basis.

Larissa Herda

Okay, so the first question is what percentage of our revenue is coming from existing customers versus new.

Mark Peters

We haven't actually disclosed that particular number, but we find that the mix can shift from quarter to quarter. So historically, we have seen it has just been a nice mix sometimes 50-50, 60-40, can put it back and forth. So it is healthy actually from both categories.

Larissa Herda

So let us talk about your hypothetical. So the customer loses 10% of their employees, what happens to the network? You know, it depends on the size of the customer. If it is a big customer, probably not much, because for the bigger customers we are often a portion of their network spend and so you know it could have absolutely no impact on us. But let us just say you have a customer where you are serving an IT VPN service to a lot of their branch locations and they close down some of their branches. So if they close down a branch or building, then you could lose circuit to that particular location, because obviously they close it down it is gone. You know voice services you could lose some usage, but interestingly we haven't been saying that but then again we are also selling a lot of voice too, so perhaps there is little bit of an offset there. Interestingly, the data bandwidth still continues to grow and that is I think because of demand drivers I talked about, where the customers are moving more stuff to the networks so they can become more efficient.

So layoffs still now we haven't had any impact and believe me, we watch them, we have a whole list of companies who have announced all their layoffs and who are customers of ours and we actually use it as an opportunity to go into them to help them understand how they can save more money with our service. So there is kind of a silver lining to that as well. So it really depends, there is no one scenario that I could give you that is going to give you an idea of the broad spectrum of customers. Every situation is going to be a little bit different.

The good news is that again, we look at our business and we compare what's going on today that to what happened back in the 2001-2003 time frame. If you go back and you look at the churn that was in our business back then, it was multiples of what our churn is today in dramatic losses and interestingly, again to remind everyone it wasn't coming from enterprise businesses it was primarily coming from carriers. So our churn has been easing up and obviously it has been putting pressure on our revenue growth. But it is still fairly at a very, very manageable churn.

And so the key for us is obviously to sell through the churn to continue the growth and that is what we're focused on and making sure that customers that we can keep from churning, we keep from churning. Obviously the customers that are going bankrupt we can’t do much about, but you know interestingly what we have found is even when customers go bankrupt they still buy services, unless they liquidate, which we did see last year and we actually saw the year before. We have actually seen the impact of the economy since the fourth quarter of 2007, when we first started talking about the mortgage industry disconnect. So we have been dealing with this for quite some time and so we are kind of seeing flavors of everything out there.

Michael Rollins – Citi Investment Research

Great, thank you.

Mark Peters

I think we are overtime, but we have time for one more call.

Operator

Okay, our final question comes from Colby Synesael from CIS Research. Please go ahead.

Colby Synesael – CIS Research

Great, thank you. Just wanted to get an update on the Xspedius markets in terms of which one of those have been brought up to have full service product suite and how many of those you anticipate maybe upgrading and getting in 2009. Also, for the enterprise growth, that has obviously been decelerating for a little over a year now. Is stable (inaudible) going to come simply when you timing factors improve or actually going to see what that can do to help do that before that actually occurs? Thanks.

Larissa Herda

I would say that half of Xspedius markets were upgraded with our Ethernet product portfolio. Now keep in mind the other markets continued to sell all of our other products. They sell Internet, they sell private line, they sell voice, they sell bundled services, so they continue to sell. Just some of the smaller markets, there is not a whole lot of activity in, we haven't put our resources there.

We have been obviously very stingy with our resources and making sure that we are putting them in the markets, where we can get the biggest bang for our buck. And some of the really small markets, we have sales that are made into those markets so we generate sales but they are not as active in some of them. So I would say about half has Ethernet services and we don't have any on the drawing board at this moment, but that can change tomorrow with an opportunity because it is really a success-based capital investment.

And it's not just capital because you also have to add people to be able to support, to be able to train your technicians, you have support it, you have sales engineers et cetera. So you know, if some of those markets end up bringing in enough business that justifies that, we will certainly consider it, but we are not rushing at this point to make any more speculative investments like that. And I am sorry, what was the second question again?

Colby Synesael – CIS Research

(inaudible) enterprise growth year-over-year for the through the last few quarters I think more than a year now, it has been decelerating each quarter. Is a stable position in that going to come when the economy starts to improve or do you anticipate that stabilizing before and based on some of the things that you are going to be doing right now?

Larissa Herda

Without a doubt, the economy improving would have a great impact on our enterprise growth, our business growth in general. We are obviously doing things to continue to grow the revenue. We talked about a bunch of it on our prepared comments today. Product development is a big thing. To remind you, when we went through the integration with Xspedius, we didn't do any new product development for about a year. So 2007 was pretty much a dead year for product development, because we had such intense integration and systems integration activities that were going on, the resources were focused on that. It was just really impossible for us to do it.

The good news is that we spent that year integrating doing all those things and last year we spent a lot of time on product development. So the managed EDGE services is the product of that, which we just launched and we have high hopes for it now. Nothing is a silver bullet as I said earlier. The way you get to growth in this business is you turn various different dials in the business. So if we can have some impact on churn as a result of some of our customer relationship activities that I talked about earlier, that gives you a little bit of lift.

We have spent a lot of time focusing our sales force in certain vertical areas and certain sized customers and teaching them application selling and things like that. That gives you a little bit of lift. We obviously have the new markets that has been giving us a little bit of lift and then we have got our new product development which will give us a little bit of lift and the managed EDGE it is probably more of a 2010 story, but we will over the course of this year, we will start to see momentum build in that and then over time, Ethernet.

Ethernet was a yawn when we first started talking it to the market in 2001, 2002. You didn't really see it impact our topline and revenue growth but of course we were dealing with a lot of negative churn, a lot of negative churn in those days. But 2005 was when people actually started to notice it and it has been growing quite substantially. So I think it is a combination of things. Clearly we could we are all looking forward to when the market turns around, and it will turn around. We feel pretty confident about that. And that will obviously help.

But one of the things I think is really important to understand that we're doing differently this time, during this downturn than we did during the last downturn and I think it is absolutely important for you to understand them. During the last downturn, we stopped investing for several years. We cut our capital spending to a fraction, to about 25% of what we had spent in the previous years. We were in a capital-constrained environment, we had debt covenants; we had to renegotiate those. And at the end of 2002, we were able to renegotiate our debt covenants. In the beginning of 2003 we announced to the markets that we were going to double our capital spending, but you really didn't really see topline growth for two years.

And the reason for that is because we went for about two years without investing and without doing the things that we have never stopped doing on this round, because we are in a much different financial position. We have cash, we have got lots of capability, we have got good demand out there, we are smarter, we learned a lot from the last round, we looked at the trends, we saw what we started to invest the CapEx when growth started to happen and we're going to continue to invest through this. Because we believe that is going to help us come out of this much faster than it took was the last time certainly and probably that it will take others who have been cutting down on their investments in the business. And so that is a very key strategic decision that we have made and fortunately we are well-positioned to be able to execute on that.

Colby Synesael – CIS Research

Okay, thank you. That's very helpful.

Larissa Herda

All right. Well, with that – sorry we went a little bit over, but hopefully that was all helpful for all of you. Thanks for your interest in tw telecom and have a great day. Take care.

Operator

This concludes our program. Thank you for joining us.

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Source: tw telecom inc. Q4 2008 Earnings Call Transcript
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