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Executives

Robert J. Currey – President and Chief Executive Officer

Analysts

Phil A. Cusick – JPMorgan Securities LLC

Consolidated Communications Holdings, Inc. (CNSL) JPMorgan Technology, Media and Telecom Conference Call May 15, 2013 2:50 PM ET

Phil A. Cusick – JPMorgan Securities LLC

My name is Phil Cusick. I cover telecom and cable here at JPMorgan. I’d like to welcome Bob Currey, President and CEO of Consolidated Communications. He has been the CEO since 2002. Thank you, Bob, for meeting us with today to answer a few questions.

I wondered since I don’t cover the company, can you give us a few minutes of just background on the company overall, and then talk about your first quarter?

Robert J. Currey

Sure, and thanks for having us today, it’s a pleasure to be here. The company is a broadband triple play provider in five states. We were formed in 2002 as a platform company to grow and we’ve done three or four acquisitions since then, fiber, a lot of fiber deep into plant, fiber-to-the-home, fiber-to-the-curb and a bit of HFC.

First quarter, we had an outstanding first quarter. We did an acquisition last year, closed July 1, so we are in the middle of integrating that, but beyond the middle at this particular stage. First quarter EBITDA was up 13% pro forma a year ago, revenue up 1.4%, and a payout ratio of 62%. So we were very pleased. Added a little over 4,100 broadband subscribers in the quarter, and announced that our first-year target of synergies of $20 million on the SureWest acquisition that we met at a quarter ahead of time, and that we’re confident that we will meet and exceed by at least 10% to $25 million synergy number that we had publicly committed to. So off to a great start 2013, a couple of quarters to go, but feeling really good; it’s a great, strong performance first quarter.

Phil A. Cusick – JPMorgan Securities LLC

Let’s talk about the SureWest acquisition a little bit. So the integration you said a little bit past half, what remains to be done?

Robert J. Currey

Basically billings. I mean there are some consolidations at our plant that are taking place as we speak. But the last big phase is billing. We’ve completed the back office, the common systems we’ve converted HR all the financial systems are now on a common system. So it’s billing – or the development hasn’t started, but the – all the planning decisions have been made and we have a philosophy that IT projects have to complete within one year. We don’t like projects to take more than a year and we don’t let them creep. So we’ve had great success operating that way and forcing the business to meet those kinds of criteria. So July of next year, we’ll complete the final phase of billing.

Phil A. Cusick – JPMorgan Securities LLC

So I understand it. Are you converting SureWest the legacy, your legacy system is billing on?

Robert J. Currey

Yeah. Since we closed, we actually they had not combined Kansas City in California. So we put those two together in the fall as the first phase and now we are into the second phase, where we are converting them to the legacy consolidated system.

Phil A. Cusick – JPMorgan Securities LLC

And what’s the timing as you – so you are starting now and planning 12 months from now sort of 2Q 2014. Do you anticipate any level of sort of reduced flexibility, slowdown, and your ability to sell as you come down to that that sort of conversion timeframe?

Robert J. Currey

No, we don’t. In fact, it’s two phases, because we’re going to convert. They have a great upfront GUI, our graphical user interface that has some great features. We are going to cut that in the fourth quarter and then convert the rest of it midyear. So you might slowdown a few regulatory changes or perhaps marketing a bit, but it’s all planned in all part of the process. Again, we don’t like to have a bunch of creep. It’s designed, somebody wants to add something, something else gets dropped and that’s just the philosophy the way we would run it and works.

Phil A. Cusick – JPMorgan Securities LLC

And as that integration sort of gets passed and probably takes a little less management time as we move to the next year. How do your sort of big efforts shift and your ability to focus on other things?

Robert J. Currey

Well, I could go a couple of different ways. I think the business is fundamentally business as usual. We’ve realigned SureWest. We’ve picked the best from both organizations. We have great sales leaderships, because we want to show some top line growth.

So we’ve positioned each of our customer segments with the best from both companies, so the focus will be there. The rest of its execution against the few things that remained the sites billing, some like I said a few consolidations. There are some things that take place. We’ll wrap up the – all of the HR changes. We did not make any changes to the HR programs until the third quarter of this year, so there is some of that that happens and then some consolidations as a result of that.

I can also read into your question, maybe the next acquisition. And I would tell you that, it’s not an automatic pilot, but we do this very well, it’s a core competency, and I would not hesitate to start discussions if the right opportunity came along, it’s going to take six months to close something and another. We don’t have anything pending today, but I’d be very confident about if the right opportunity came along doing something in that, that’s how confident I’m and where we are at…

Phil A. Cusick – JPMorgan Securities LLC

The rest SureWest to the point where now you can look at other things?

Robert J. Currey

Absolutely, yeah.

Phil A. Cusick – JPMorgan Securities LLC

What are the criteria you would use to do an acquisition?

Robert J. Currey

Well, there is a series of them. First, you would always like it to be contiguous and that’s probably not going to happen, there are some things that you could do contiguous. From a financial standpoint, accretive, delevering, ease of integration, we would not want to go backwards on just a pure ILEC voice company. We’ve made a transformation to a broadband deep fiber kind of company.

So I would look at an ILEC, but it would have to have fiber, the ability to offer a triple play without a lot, I don’t want a much of neglected copper that you would have to spend, $400, $500 per line to be able to get 20 meg or 30 meg and be able to offer a video product.

So those some size if you’re going to go outside to five-state area that we’re at, we don’t want to have 5,000 access lines in 20 different states. We’re not interested in that. I’m not interested in Hawaii or Alaska or anything like that, which are typical rumors. So those would be, I think, I’ve hit most of the material, the criteria that we look at. We’d obviously like to use our stock and continue to delever and focus on delevering.

Phil A. Cusick – JPMorgan Securities LLC

What’s the target leverage level for you?

Robert J. Currey

Well, in short-term, very short-term is to get below 4. I’d like, if it’s a 3.99, I’d be happy, I want to get below 4, and then get to the mid threes in the next two, three years.

Phil A. Cusick – JPMorgan Securities LLC

Is that mid threes, given the sort of pace of the business, that’s a sustainable level for you?

Robert J. Currey

Yeah, I’m very comfortable at 4.15 that we just announced this quarter. But we’re – it’s pointed out to me that we are high compared to the rest of the peer group. And I’ve been doing this a long time, and leverage numbers move around depending on the decade that you are in. So we’d like to be lower from a risk parameter for people who have criteria whether they can own you or not. And frankly the next deal, we’ve levered up to do a deal and I’d like to be lower, so that if the proper deal came along, you had to use a little cash. It’s always good to include a little cash to get a deal done and have the flexibility to put a little cash into a deal and make a deal happen.

Phil A. Cusick – JPMorgan Securities LLC

You mentioned that 62% payout ratio, a lot of people are having issues with taxes having deferred a lot of taxes for the last few years, is that 62% sort of normal deferred taxes or is that a little bit under?

Robert J. Currey

No. Well, a couple comments on that. We have been a full taxpayer before the SureWest acquisition and before bonus appreciation. So we are taking advantage of bonus appreciation. We’re also – we picked up about $80 million of NOLs when we did the SureWest acquisition. So we are not paying much in Federal income or state taxes this year or next year, but willing to ask those next year. But we’ve been a taxpayer in the past and with the growth of our broadband, our wireless partnerships, our Verizon wireless partnerships, the synergies, et cetera, we are very comfortable that the dividend payouts stays in the 60% even when we become full taxpayer – full cash taxpayer.

Phil A. Cusick – JPMorgan Securities LLC

Okay. So even as a full cash taxpayer you say in the 60% range, as you think about that those Verizon wireless partnerships a system on there since you mentioned, describe what they are to us and sort of what the dynamic of control and cash flow looks like?

Robert J. Currey

Okay. Well, they go back to the early 80s when SEC allocated spectrum and the ILEC were encouraged to come together and create partnerships and then one was B-Side license was given for the competitive side. So they go way back and you funded on at that time, they were growing and you made capital calls.

So we’ve acquired these five. We’ve had no capital calls, we are doing very, very well. And they were growing in excess of 20% a year until three years ago, two years ago, and then the LTE builds and the subsidy for iPhone launches, two iPhone launches.

So the growth slowed down, didn’t stop, but now four of the five partnerships the LTE builds are done, Verizon isn’t subsidizing as much on the iPhone as they did before. And last year we received $29 million of cash distributions and we are forecasted to grow at least 10% this year in the last two quarters substantiate that. So we are thrilled to have that growth component that helps offset some of the other pressures of the business.

Phil A. Cusick – JPMorgan Securities LLC

There was a time when Verizon was taking out partnerships like this pretty actively. Why did you not take advantage then and is there a conversation to be had today if you wanted to?

Robert J. Currey

Well, Verizon, the goal for 20 years was to gain operating control. And once they got to 50%, that’s all they really carry about for a period of time. That changed a few years ago and some of these particularly the MSAs, they are not so much have offered in the RSAs. But they really want to buy them at market or below, they really aren’t offering premium. So a couple of examples, when we look at it, I talked about leverage. When we look at it is a very low tax basis on these. And when you figure even if you’ve got a little premium to market after you netted for taxes and everything else, it doesn’t move the needle on our leverage.

So we think it’s a great component to the security and predicability of our dividend. So that’s one reason to not sell. The other side of it is, there aren’t a lot of sales taking place. Almost everybody likes the wireless business, the limited partners.

At year-end 2012, we did have one of the Texas partners sold, it’s a – it was a private family, probably to beat the increase in capital gains, taxes, and family sometimes argue about distributions and being poor millionaire et cetera, I don’t know exactly the reason that they sold, but they sold. And Verizon negotiated the sale at six times cash flow and we thought that was a great buy. So under the under the partnerships agreement, you have a right to your pro forma share. So we spent $7 million and brought our pro forma share of that Texas RSA. So we’re – we’d – at those kind of levels, we’d be buyers, we are not sellers.

Phil A. Cusick – JPMorgan Securities LLC

Six times cash flow, it seems pretty good and Verizon wanting to buy at or below market seems familiar too.

Robert J. Currey

Yeah. I don’t blame them. We’re not a seller at that price. Like I said, we are very happy with the growth. I use the expression I do not like loosing access lines, but these partnerships surround a lot of our territory. So if I’m going to loose an access line, I hope for a wireless substitution. I hope they go to Verizon, because I get something back on the other side with the performance of those partnerships.

Phil A. Cusick – JPMorgan Securities LLC

Remind me your annual total dividend?

Robert J. Currey

The dividend it’s $1.54 annually at roughly 40,000 shares or $60 million surrounding.

Phil A. Cusick – JPMorgan Securities LLC

This makes us happier, your dividend.

Robert J. Currey

That’s the way to look at it.

Phil A. Cusick – JPMorgan Securities LLC

All of this held on your existing debt as well?

Robert J. Currey

Yes.

Phil A. Cusick – JPMorgan Securities LLC

Okay, good. Okay, the other thing actually let’s sort of switch over to the residential business given the core, can you talk about copper in the core, what’s just the overall sort of copper, fiber and sort of hybrid plan right now?

Robert J. Currey

Okay. We have, we pass approximately 700,000 homes, 200,000 of those homes are fiber-to-the-home, 100,000 are hybrid fiber coax, and the remainder are copper. But we’ve pushed copper or fiber deep into the plan not a piles model like fiber-to-the-home on a 200,000, but more or like the AT&T U-verse product. So we’ve got fiber deep into the plan, short loops have been doing that. In fact, when we made the decision, we were going to be as good at broadband as we are, as we were in voice. We started making that transition long before we thought about getting into the IPTV business. We were shortening loops, because, we knew broadband requirements were going to expand, and we needed to be able to provide a more robust product.

Phil A. Cusick – JPMorgan Securities LLC

And talk about the IPTV business and how – is this an attractive business, do you need to sell TV to be in the broadband business today?

Robert J. Currey

Well, we think it’s helpful. We‘re small, we have a little over 100,000 video subscribers. But most of those take a triple play. So and clearly we’ve led the industry for ever on access line losses, and a great deal of that comes because of the triple play. So it’s been a loss – loser until last couple of years. The margins still aren’t in the, what I think, the 25%, 30% that they should be, but that’s also not taking any credit that you’re getting on access line loss or line retention or the pull-through that we know we get on broadband, because they take the triple play and the value proposition as such that they take the triple play.

Phil A. Cusick – JPMorgan Securities LLC

I want to make sure I understand. You get a 25% to 30% video margin?

Robert J. Currey

That’s what I think it should be.

Phil A. Cusick – JPMorgan Securities LLC

Okay.

Robert J. Currey

We’re not there yet. We have, like everybody, there’s programming challenges and a lot of other challenges. And frankly, when we started the IPTV products, there was nobody doing it end-to-end. So you had challenges getting vendor operability or interoperability problems out of that network. You didn’t have HD, you didn’t have DVR, there were a lot of things you didn’t have in the early days advertising, and we have all of that now. We’ve got stable platforms taking a lot of trouble out of it, and so we like it.

Obviously like everybody, we look at reselling satellite. We like this a lot better. We control it. We’re not held hostage to a national rate card that you can’t change, we can change. Unfortunately, most of the programing costs are on things you have to have sports and things like that. But we can move channels on and off depending on the local market and the viewership that we are receiving at that time.

So we pay a little more of our size. We don’t have the buying power that others do, but we get it through the NCTC consortium. So we get about 75% or 85% of our program we buy through to them, where we can do it cheaper negotiating directly, we do it ourselves.

Phil A. Cusick – JPMorgan Securities LLC

I’ve had this conversation with few people who say, of your size and significantly bigger, who say we get x% through NCTC and then we get 20% or 30% or 50% on our own. And I’m just amazed that with the size that NCTC is that anybody of your size can negotiate a better deal with…

Robert J. Currey

I know.

Phil A. Cusick – JPMorgan Securities LLC

…than they should be?

Robert J. Currey

Yeah.

Phil A. Cusick – JPMorgan Securities LLC

Doesn’t make a lot of sense to me.

Robert J. Currey

I know, but I can show you examples of it, it actually happens. In some respects, it would be easier to buy it from one person, and that’s where it all started out, when we first entered the business. But you find out there’s dealers you can strike differently, and again, we’re – a lot of it is the same product across all of our markets, but you have unique things in Illinois and East Central Illinois where we operate big farming community.

It’s not called the tractor channel, but that’s what I call it, and you get 2% or 3% of your subscribers there who want to track your channel where, in Sacramento, California there it’s not a big take for that particular product, but so we have flexibility there.

Phil A. Cusick – JPMorgan Securities LLC

Shocking. So remind me the available for sale homes, where is that going and what’s penetration today?

Robert J. Currey

Well, of the homes, it’s 700,000 today. We’ll add a handful this year. Last year, we just put 5,000 homes.

Phil A. Cusick – JPMorgan Securities LLC

Sorry, but for video?

Robert J. Currey

Oh, for video?

Phil A. Cusick – JPMorgan Securities LLC

Yeah, sorry.

Robert J. Currey

Okay. On video, let met start with first of all, we can get 20 meg to 80% of our homes. We can get 50 meg to 30% of our homes. And you need roughly 20 meg to offer a triple play package of video, broadband and data, okay. So we have a large footprint that we can sell into. We currently on video, across the company, we’ve got 20% penetration, okay. We have markets that are in the high 30s and we sought to set sort of an interim goal to get into the low 30s on video penetration.

So SureWest was investing a huge amount of capital in order builds in the residential area. They were winding that down, we’re continuing that, and we’ve made the shift more towards the enterprise and commercial business. So more of the CapEx is going that way with better margin plus we have this upside where we’ve made the investment and just go out and get the penetration, so we see upside there.

On the broadband side it’s currently 30% custom marking again, we’re not measuring that against our access lines. If it was against the access lines, it would be in the high 60%. For that past 700,000 homes, there is no reason I shouldn’t get in and use that as my base. So that’s a 30% and we’ve got market in the north of 40%, so we think 40% is kind of a good interim kind of target. So we think there is plenty of opportunity there to grow that side of the business.

Phil A. Cusick – JPMorgan Securities LLC

Is penetration in your markets not your own, but overall broadband penetration in line you think with the national average you think you’re…

Robert J. Currey

Now, we are better.

Phil A. Cusick – JPMorgan Securities LLC

You’re better?

Robert J. Currey

Yeah, we are better. And quite frankly it goes back to when did you launch, and the markets were, we were the first to offer triple play, got on the head as a cable company and maybe had brand and local recognition and a great service reputation. We’re north of 70 in some of those market, one that we acquired in an acquisition that did not launch – didn’t launch triple play actually that launched a pretty shabby broadband product with some bad modems that they didn’t replace. We probably started out in the low 30s, we’ve moved that into the low 40s and those are access, nobody can figure out how to find out how to find out exactly where you are, but those are pretty good guesses on where we are at. So overall, we are north of 50 different than sort of the national average.

Phil A. Cusick – JPMorgan Securities LLC

Okay. And you overlap with Google Fiber a little bit?

Robert J. Currey

Not yet [Multiple Speakers], yes

Phil A. Cusick – JPMorgan Securities LLC

They already have all the permissions and right aways in those couple of cities they’ve gotten in Kansas City?

Robert J. Currey

I don’t know that they have them all, but they are working on and if they don’t and they will get them.

Phil A. Cusick – JPMorgan Securities LLC

We talked to AT&T CEO this morning and one of the precisions and you talked about sort of a – I’ll take one of those from all the permissions that Google has got. As you see what they are doing, how does that change, how you think about building out your plan?

Robert J. Currey

Yeah. Well, there is not a lot to see yet. The rumor is that there are about 40% built in that parts of Kansas City not territory, but the parts that they announced three years ago and supposedly a couple of hundred customers. So it’s really hard to tell exactly what they are going to past. Our estimate is in a couple of years they might overlap as with 5,000 homes, 3,000 to 5,000 we don’t know for sure. They announced they are going to run fiber down particular part of the territory and then they look for contract how many want it, and then they are going to run that.

So it’s hard to know exactly what they are going to be, as far as what Randal might have said, and I didn’t hear it. Everybody was bidding for Google three year ago when they announced this project and going to pick a city. Cities were not at their way to fall all over them, the supplier of lasers are and all the commissions that I thought to get the right, to give telephone service, and broadband, and video and you had to build a whole area, you can’t cherry-pick and these guys rollover for them…

Phil A. Cusick – JPMorgan Securities LLC

Right.

Robert J. Currey

And also they’ve had right aways and laterals into public buildings that none of us could get. So as soon as what Randal was probably referring to that and we’re doing the same exact thing, we’d like to have the same. I don’t want to diminish Google at all, you’d be crazy if you didn’t watch what they are doing. But frankly, there is a lot of announcements and sizzle and I get tons of questions about it, and we’ll watch them. But we’ve had Comcast, AT&T, Time Warner for five, six years now that de-pocketed players that we’ve been competing against and we’ll do the same thing.

I think what’s really good about Kansas City at least where we are operating is we are all fiber-to-the-home and hybrid fiber-coax. So we’ve got bandwidth that far exceeds any current or future customer needs at this particular time. And with very little CapEx, we could take the 50 meg to the home to a 100 meg. And I don’t know very many people today that need 50 meg, I wish we had more customers that were willing to pay for it, but there aren’t many that require that. So I think we are in pretty good shape.

Phil A. Cusick – JPMorgan Securities LLC

That’s interesting. But in terms of the – all of the, yeah, as you’ve said the right aways and ability to cherry-pick markets, they’ve gotten permission for it, if you walked in right behind them and said, yeah, sign us up.

Robert J. Currey

We’re doing that.

Phil A. Cusick – JPMorgan Securities LLC

Yeah.

Robert J. Currey

Yeah. Part of where they went originally, we weren’t’ there, okay. We’ve got some fiber, but it isn’t in neighborhoods that we built. It’s more the fiber, again, back to SureWest, SureWest built our Everest actually, the predecessor to SureWest. SureWest bought Everest. Everest was an over-builder in the southwest part of Kansas City. They are in very attractive high per capita income demographic.

So it’s a great area, but the fiber that they deployed there was mostly around residential and there are some great opportunities to tap the commercial market and that’s where we have some focus. And there is actually an opportunity when Google really gets up and running that maybe you can provide some transport services to them or they won’t have to build to certain areas where you are already at and you – we sell guns to all size. If it doesn’t matter who it is, we can provide it and make money at it, and they don’t have to build. We’ll if we are smart, we’ll enter in those kinds of agreements also.

Phil A. Cusick – JPMorgan Securities LLC

I want to follow-up on commercial, but are there any questions from the audience?

Robert J. Currey

No.

Phil A. Cusick – JPMorgan Securities LLC

So let’s talk about commercial, given your heavy fiber plant, I would think that you have a pretty good commercial effort there as well. What’s the sort of overall business look like in commercial? And what’s your sweet spot in terms of your customers?

Robert J. Currey

Well, the sweet spot is really service, I mean, we’re all selling metro EE. We are not leading with a data center product, but we have data centers, basically in our COs that have vacant space, particularly in Kansas City with some of the consolidation. We’re actually expanding the data center there, but it’s more approved colocation or backup those kinds of services.

So we’re – everybody is pretty much offering the same products. Some of it is how you bundle it, but the real differentiator for us is service. It’s our repairment out there with relationships with customers. We’re not on a wave through with the sales force and then disappear. It’s there, try to take care of the problems, the back up, answer the phones within three rings, you are not having people on hold for long periods of time. It’s more of a service differentiation and quite frankly the cable guys have caused everybody particularly the big guys to get back and pay some attention to medium and small-sized business. We’ve had some success again back to the CLEC.

We have big CLEC in Pennsylvania and in California and Kansas City, a big transport network in Texas. And there is – that we’ve had some nice success going out of territory other than so-called ILEC territory. And you get an anchor customer to it basically pays for it particularly if you can get a large university or a hospital with almost to be just great entrees and support a build that you can come in and go after others then or a diversification route for it maybe Europe video or data product where Europe come for diversification and backup.

Phil A. Cusick – JPMorgan Securities LLC

Okay. We’re running out of time here. If you come back next year and I hope you do. What are the two or three things that you look out over the next 12 months really have to happen to make this company a successful one?

Robert J. Currey

Well, I’d start with completing the integration and substantially exceeding the public items that we gave, that we’ve given on synergies I think that would be one, to manage through the regulatory impacts, the inter-carrier comp and USF changes, I mean we’ve got good handle on that and we are managing and we are managing through that. And then obviously the service levels no slippage and continued to get better taken trouble out and reducing costs. And – but probably the most important is the sales and the focus on the revenue. If we didn’t have these changes going on at the SEC, this business would be almost fun again.

You’d have 3% or 5% maybe revenue growth. I think that would be possible. We’ve got to offset that and frankly, any growth would be a real positive, and I think we have a great opportunity, we’ve displayed it. That’s just like we’re on the record here, completely that’s net of losing the prison business that we no longer have in Illinois. So you got to take out $20 million of revenue, basically EBITDA neutral, but there is a revenue hit there.

So you take that out and if on a pro forma basis, we show any kind of revenue growth, it would be a good year, because I think in two or three years, when we’re through the transition of the inter-carrier comp and USF perform and we continue to do what we are doing today, it will be a good, and we’ll be able to call the group business, again, that will be a lot fun.

Phil A. Cusick – JPMorgan Securities LLC

Is there anything else you like the prison business that’s coming up that we should be thinking about?

Robert J. Currey

You mean that we might not…

Phil A. Cusick – JPMorgan Securities LLC

No other big contracts?

Robert J. Currey

No, no, there is really – we are left with a small county jail business, $3 million, $4 million of revenue, $400,000 of EBITDA, we’re not going to stay in that business. We’re going to sell that. We’re already in the process of that, but no, other than that, there is nothing that we have that, we’re blessed across the five-states, we are not hostage to any significant downturn in any economy. Texas is blooming again. The Houston area is doing very well. California showed some signs of finally bottoming out.

So we think there is some opportunity there. North Pitt is doing well. Kansas City is very vibrant. We like that property. East Central Illinois, stable at best, not much going on in Illinois, pretty difficult for everybody in Illinois. We have some challenges there at the state level. So we’re blessed with a mixture of rural, suburban, not hostage to any industry or segment of the country, I think we can weather, and if the enterprise parts of the economy pick up, that’d be very helpful also.

Phil A. Cusick – JPMorgan Securities LLC

I need to follow-up, it’s twice you’ve alluded to higher synergies or faster synergies coming from the SureWest business, from what you’ve already achieved, which is a good chunk of your guidance, do you need to get through that billing transition next year to really see the next level or is there more that could come…

Robert J. Currey

I think there is more that will come between now and next year, yeah. I’d be very disappointed if we didn’t continue to make some progress there. Maybe just a little context around that, Phil; the $25 million is kind of, you do diligence and you come up with a very detailed list of what you are going to do and we did that. Then you do a reasonable list to test on the OpEx of the company you acquired and it was roughly 15%. Person in fields, and of course, they range all over in size, have been 18%, 19%, and so we’ve historically achieved 10% more than we originally forecasted, and I think where we are early in the game, I’d be very disappointed if we weren’t at least 10% of that public number, but.

Phil A. Cusick – JPMorgan Securities LLC

You are little more conservative given they are only 15% cost ratio …

Robert J. Currey

I think so. I think that you’re always going to find some things that don’t go well that you missed. In this case, we didn’t find any, I mean, we are 10 months into it and we pretty much got what we thought and then when we get it into it, there were some things that were subscale and needed to get bigger team size and we’ve announced some of those and have started to implement those and that’s where some of the additional savings are coming from. It’s roughly a 75% people, 25% public company kind of thing; you don’t need to two auditors.

Phil A. Cusick – JPMorgan Securities LLC

Right.

Robert J. Currey

You don’t need two boards. You don’t need two accounting firms, that kind of things. So and I think we’ll overture on both of those components.

Phil A. Cusick – JPMorgan Securities LLC

Good. Thanks, Bob.

Robert J. Currey

Yeah, thank you.

Phil A. Cusick – JPMorgan Securities LLC

That was great.

Robert J. Currey

Enjoyed it.

Phil A. Cusick – JPMorgan Securities LLC

Nice to see you.

Robert J. Currey

And I call you for joining, and if anybody didn’t want to ask him, we can step on the wall, you got – probably got another meeting.

Phil A. Cusick – JPMorgan Securities LLC

We’ve got somebody else coming in a few minutes.

Robert J. Currey

Okay.

Question-and-Answer Session

[No Q&A session for this event]

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Source: Consolidated Communications Holdings' CEO Presents at JPMorgan Technology, Media and Telecom Conference Call (Transcript)
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