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Windstream Corporation (NASDAQ:WIN)

Q1 FY08 Earnings Call

May 9, 2008, 8:30 AM ET

Executives

Rob Clancy - Sr. VP & Treasurer

Jeff Gardner - President and CEO

Brent Whittington - EVP and CFO

Analysts

Jonathan Levine - Jefferies and Company

Jonathan Chaplin - JPMorgan

Patrick Ryan - Lehman Brothers

Jason Moser Fraser - Raymond James

Christopher King - Stifel Nicolaus and Company

Michael Rollins - Citigroup

Gaurav Jaitly - UBS

Operator

Good morning. Welcome to the first quarter 2008 Windstream Communications Earnings Call. All lines are placed on mute.

We would now like to introduce our speaker Rob Clancy, Senior Vice President and Treasurer.

Rob Clancy - Senior Vice President & Treasurer

Thank you, Daniele and good morning, everyone., Aand we appreciate you joining us this morning. Today's conference call was preceded by our first quarter 2008 earnings release which has been distributed on the newswires and is available from the Investor Relations section of our website. Today's conference call should be considered together with our earnings release related financial information.

Today's discussions include statements about expected future events and future financial results that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to uncertainties that could cause actual future events or results to differ materially from those expressed in such statements. Other factors that could actual results of Windstream to differ materially, many of which are beyond the control of Windstream include, but are not limited to the items listed in the Safe Harbor Statement contained in our first quarter 2008 earnings press release.

Today's discussion will also include certain non-GAAP financial measures including the terms OBITDA which is defined as operating income before depreciation and amortization. Again we refer you to the IR section of our website, where we have posted our earnings and supplemental materials which contain information and reconciliations for any non-GAAP financial measures.

Now we have provided pro forma results from current businesses that include our results as if the VALOR and CT acquisitions had occurred on January 1, 2006. and exclude one-time transaction related fees. We will make references to these pro forma results from current businesses including the year-over-year comparisons during our call.

Now before we proceed, let me also mention that we made several minor changes to our revenue expense classifications, which have been reflected in our GAAP and pro- forma results from current businesses in both current and historical periods. These changes are not material and better align our reporting structure with both our price capital election and the completion of the CT billing-system conversion.

Participating in our call this morning are; Jeff Gardner, Windstream President and Chief Executive Officer; and Brent Whittington, Windstream Executive Vice President and Chief Financial Officer. At the end of the call we will take a few questions.

So with that, here's Jeff Gardner.

Jeff Gardner - President and Chief Executive Officer

Thank you, Rob, and good morning, everyone. Before I get into the details, let me first say that I am very pleased with our results for the first quarter. We are continuing to deliver solid operational metrics and more importantly, cash flow. In fact, with the accelerated depreciation tax benefit, complements of the federal stimulus package, coupled with our share repurchases and a the consistent cash generation from our business, we now expect our payout ratio to be between 60% and 65% in 2008.

We have been successful in replacing the residential voice revenue streams we are losing with growth and data, special access and long distance. Our business channel is showing growth year-over-year, and our team is doing a very nice job managing both operating expenses and capital expenditures.

To-date, the broader challenges in the U.S economy do not appear to have much effect on our business and the Windstream team is executing at a high level. Let me turn to the details.

During the first quarter, we repurchased roughly 8.4 million shares at an average price of $11.99, completing $100 million of our $400 million share repurchase authorization. As a reminder, when completed this repurchase program will result in lowering our payout ratio by 300 to 400 basis points without significantly increasing the leverage on our balance sheet.

The Windstream team has worked very hard integrating CT Communications, and I am pleased to report that we completed the billing system conversion in March. The integration went very smoothly and going forward we expect to realize the full synergy run rate of $30 million annually. , aAlthough most of the synergy savings are reflected in our current expense run-rate.

Turning to our pro forma operational results, we added almost 40,000 new broadband customers during the quarter, bringing our total broadband customer base to 911,000 an increase of 22% year-over-year. Broadband penetration is now at 29% of total access lines.

We also launched ADSL 2+ across our markets in late April, allowing us essentially to double our broadband download speeds across most of our footprint and operate 10 to 12 meg speed in certain markets. With this technology, virtually all of our broadband customers can now receive at least three meg service. Faster speeds will increase our competitiveness and revenue opportunities by providing a platforms to sell additional products and services, which is an important part of our strategy to trans balanceform this business to a broadband centric model.

We also added 15,000 digital TV customers in the quarter, bringing our total customers base to approximately 210,000 or 11% penetration of primary residential lines. During the quarter, we lost roughly 42,000 access lines, a 4.9% decline in total access lines year-over-year.

Our growth ads increased year-over-year assisted by our sales and marketing efforts. But we also experienced higher disconnects resulting in an incremental 10,000 lines loast year-over-year. Although cable competitors continue to launch new voice services, much of the year-over-year increase came from our CLEC and business channel were a significant amount of incremental lines lost migrated to higher capacity circuits, which contributed to the revenue growth in our business channel year-over-year.

Non-paid disconnects also increased by 2000 units year-over-year, although the sequential increase was only 1000, thus supporting the view that Windstream ruled telecom markets appear to be more insulated from difficulties in the economy. Our business channel continues to perform well, next generation data services such as Virtual Private Network services or VPN, broadband, and long distance sales are contributing to revenue growth year-over-year, and we are seeing a nice lift in the number of special circuits of itin service. We've also been proactive in extending contracts and strengthening our existing business relationship.

On the regulatory front, the SEC approved our petition to migrate the balance of our ILEC properties from rate of return to price cap regulations at the federal level, effective July 1, 2008. This will enable Windstream to maintain competitive prices as we continue to improve the cost structure of our business. Price cap conversion to will allow Windstream to deregulate broadband services removing the federal Universal Service Fund surcharge, currently assessed to customers, thus providing Windstream with improved competitive parity. We expect this change to have little effect financially in the near-term, but to that provide s future benefits as we continue improving our cost structure while competing aggressively for new wholesale business.

At the state level, the Texas PUC concluded there universal service high-cost reform effort, which will result in a decrease in Windstream USF revenue of roughly $5 million annually, beginning in 2009. Subject to competitive conditions, we expect to make modest rate increases to offset this amount.

In summary, we are off to a great start in 2008. We remain confident in our ability to sustain cash flows of our over a long period of time. Aand as we've stated before we will pursue strategic opportunities that our free cash flow accretive. We believe that consolidation is healthy for this industry because transactions can generate significant operating efficiencies and increase cash flow. We will stay focused on improving sales and service levels, delivering industry leading operational metrics and achieving our financial goals so that we are well-positioned for any strategic opportunities that are in the best interest of our stakeholders.

Now, let me turn the call over to Brent to discuss the financial results.

Brent Whittington - Executive Vice President and Chief Financial Officer

Thank you, Jeff, and good morning, everyone. For the first quarter on a GAAP basis, Windstream achieved consolidated revenue of $812 million, operating income up $299 million and $0.27 of diluted earnings per share. Our GAAP results include $1.6 million of merger and integration expenses related primarily to the CT system conversions.

Let me now turn to our pro forma results from current businesses, which exclude the $1.6 million of merger and integration expenses and include the VALOR and CT results for our all periods. For the quarter, Windstream achieved consolidated revenues of $812 million, an increase of 1% year-over-year. Consolidated OBITDA up $423 million, an increase of 4% year-over-year and operating income up $300 million, an increase of 11% year-over-year. The increase in operating income is related to the OBITDA increase, which I will cover shortly and lower depreciation expense caused by lengthening life of various assets based upon appreciation studies we completed last year.

Turning to our Wireline segment, revenues were $788 million, an increase of 1% year-over-year, collectively long distance, broadband, and special access revenues grew at 12% year-over-year and continue to replace the declines we've seen in voice revenues.

We are experiencing solid growth in business data services and special access circuits, as well as broadband revenue due to the continued growth in penetration and our increase in long distance revenues was a result of strong growth in sales of long distance packages combined with price increases implemented late in the fourth quarter of 2007. Finally, we experienced 4% year-over-year growth in switched access and USF revenues attributable to a variety of factors, including an increase in regulatory related expense and new federal and state subsidies that we do not receive last year.

Turning to Wwireline expenses, in total cash expenses declined by $8 million or 2% year-over-year. This consisted of $2.5 million decline in restructuring charges and the $5 million reduction in operating cash expenses.

Turning to specific expense categories, cost of services increased by approximately $4 million or 2% year-over-year related primarily to increased fuel and utility cost, increased business taxes, and USF fees. In addition, bad debt expense is slightly higher year-over-year in part due to the sell of certain receivables we had in the first quarter of 2007. This These expense increases were partially offset by lower pension and benefit expenses.

Within SG&A, expenses decreased by $11 million or 10% year-over-year, largely from cost efficiencies related to our IT optimization activities we worked on throughout 2007, the realization of synergies from the acquired CT business, as well as lower advertising spend this quarter, although we plan to ramp up our advertising in the second quarter. In sequentially total cash expenses were essentially flat.

For the first quarter OBITDA was $420 million, a 4% increase year-over-year driven by combination of revenue increases and lower expenses. Our OBITDA margin increased to 53.3% up from 51.9% in the first quarter of last year. Looking forward we expect the seasonal increase in payroll of roughly $3 million per quarter and we plan on making incremental investments in advertising for the remainder of the year to promote our broadband speeds enabled by our recent ADSL 2+ deployment and to expand our sales and distributions efforts.

In our other operations, which include our product distribution business and our wireless business revenues were $78 million, down approximately 17% year-over-year. This decline is entirely attributable to our supply business and because the majority of sales are internal, the revenue closely tracksed our capital expenditures. OBITDA for our other operations was $3 million, with the year-over-year increase driven entirely by improvements in the wireless business. We spent $56 million in capital expenditures during the first quarter, down year-over-year due to improved capital management initiatives by our network team resulting a in fewer carry over projects from 2007, as well as lower routine service funds spend and slower subdivision development that we have seen in some areas. Nonetheless we expect our quarterly CapEx spend to increase from the first quarter level, but we will continue to manage CapEx aggressively.

From our balance sheet perspective we ended the quarter with $54 million of cash and revolver of balance of $115 million, which is up slightly from the year end. At the end of the quarter our leverage ratio was 3.2 times.

During the first quarter, we completed several asset dispositions, including the sales of the former CT headquarters building, and wireless partnership interest we acquired in the VALOR transaction, and wireless spectrum acquired in the CT transactions, resulting in pretax cash receipts of roughly $25 million., Bbecause the significant current cash flows generated by the business, along with the asset sales and cash-on-hand, we were able to repurchase $100 million of our stock and retire approximately 8.4 million shares of Windstream common stock with only a slight increase in our revolver.

This is quite an accomplishment given a fact that the first and third quarters of each year include interest payments on our notes. Since, our first quarter call, the stimulus package was passed by Congress, allowing companies to benefit from lower cash taxes related to accelerating depreciation. We now expect our cash tax rate to be in the mid-20s, which is down from the low-30s. With this reduction in cash taxes, coupled with the benefit of our repurchase plans, we now expect our payout ratio to be 60% to 65% in 2008, a significant reduction from the 70% to 75% range, we originally provided.

In summary, we are very pleased with our first quarter results. The Windstream team has done an exceptional job executing on our initially initiatives including completing the CT billing-system conversion, deploying ADSL 2+, managing operating and capital expenses, and executing our operational initiatives, all of which continue to strengthen our position in this industry.

With that, we will now take a few of your questions. Operator, please review the instructions, and open the call to questions, and thank you for your time.

Question And Answer

Operator

[Operator Instructions]. Your first question comes from the line of Jonathan Levine from Jefferies.

Jonathan Levine - Jefferies and Company

Thanks. I just wanted to see if I could get a little more color in regards to your deactivations. How many of them were really second lines and to extend that you know where they went, whether its wireless, cable?, Sso if you can give a little color on that, that would be great. Thanks?

Jeff Gardner - President and Chief Executive Officer

Hi, Jonathan this is Jeff. Our second line penetration has not changed significantly and so what we looked at I don't know if we reported that number. But, it's something, it's pretty low compared to our peer group in terms of the number of second lines. So our competition is mainly coming from the Voice- Oover- IP competitor in mostly on the cable side and then followed closely by wireless substitution. So we did see some slight increase in voice competition across our base, but again I think where we continue to battle that very aggressively. What I wanted just to reemphasize during the call is a lot of our access line losses. , Tthe year-over-year increase was driven by some activity in our business in CLEC channel, which if you look at the, if you step back and look at that basically what you are doing as is you are selling additional products and services to those customers that are generating more revenue. But, when you look at actual access lines the number is under some pressure. So we didn't see a lot of change in our residential access line run rate.

Jonathan Levine - Jefferies and Company

Thanks.

Jeff Gardner - President and Chief Executive Officer

You're welcome.

Operator

Your next question comes from the line of Jonathan Chaplin from JPMorgan.

Jonathan Chaplin - JPMorgan

Hi, thanks. Two quick questions if I may, firstly on the economic stimulus package. I'm wondering if you can sort of breakout how the stimulus package unwinds in subsequent quarters, you kind clearly of get a big cash tax benefit this year. Do you get an equal cash tax hit next year or does the cash tax drag on unwindwind over a number of years? And then, I am wondering where DSL ARPU came in this quarter, and what the impact from higher speeds has been on your ability to take ARPU up to up-sell customers customers. Iif you have seen any impact from that so far? Thank you.

Brent Whittington - Executive Vice President and Chief Financial Officer

Jonathon, this is Brent, I will take down on your question; I will start with the stimulus package. Really the way that works is we do get, as we kind of indicated, a significant increase and depreciation reductions deductions this year that help lower our cash taxes to that mid 20s rate that I indicated before. You will see that accelerateing in future years, not future quarters, but in future of years, but at a slower rate. That kind of give back from a depreciation standpoint really occurs over the remaining life of those assets. Aas you know in the wireless business that's a very long time, so that's kind of way that's going to work out.

With regard to DSL ARPU, we see no major change in the quarter for us really; it's continued to hurt hover a lotright around the $30 point as we have indicated in the past., Oour promotions in the marketplace right now are really focused on consistent price point of around 20 bucks on average for any speed, because what we are really trying to do especially with out ADSL 2+ rollout is ramp up significantly the number of customers we have subscribing to higher speeds and then after a six months timeframe, that price point begins to escalate and we believe that's going to begin to lift ARPU in the back half of the year.

Jeff Gardner - President and Chief Executive Officer

Right. And I will just add that our marketing campaign to kind of drive this up speeding was kind of tailored to coincide with the ADSL 2+ component, so we are hopeful that we will see good things going forward in that respect.

Jonathan Chaplin - JPMorgan

Great. Thanks, guys.

Jeff Gardner - President and Chief Executive Officer

You'rewelcome.

Operator

Your next question comes from the line of Patrick Ryan from Lehman Brothers.

Patrick Ryan - Lehman Brothers

Good morning and thanks for taking the question. Brent, I think you mentioned that there were some statements federal USF receipts in this quarter that were not their last year. Could you tell us what that was and then another question, could you just remind us, I think there was some restrictions from the Alltel spin in terms of your ability to issue equity, could you remind us what those restrictions were and when they expire? Thank you.

Brent Whittington - Executive Vice President and Chief Financial Officer

I will start with the subsidies, really as I indicated there were two subsidies that we began receiving this year and that's not just a Q1 event. That's something that we will see throughout 2008. Specifically one state where we did not receive any USF receipts in prior year because of higher regulatory expenses as I indicated, we became eligible for receipts in this year. Aand that's something that we expect to see throughout '08. Sspecific to the federal side, it was kind of a niche part of the broader higher cost fund for which we became eligible this year that we want this year and I'mweren’t in previous years, called safety net fund effectively, in some very precise markets that we saw.

Patrick Ryan - Lehman Brothers

Do you have any amount for those?

Brent Whittington - Executive Vice President and Chief Financial Officer

All-in-all probably just round about $2 million in this quarter, somewhat in that range.

Patrick Ryan - Lehman Brothers

Okay

Jeff Gardner - President and Chief Executive Officer

Patrick, on the... when we separated from Alltel in July 2006, we had a tax sharing agreement that limited the amount of equity we could issue related to a transaction. Aand that tax rate agreement is effective until July 18, 2008. So 70 or 80 days I guess.

Patrick Ryan - Lehman Brothers

Great. Thank you.

Jeff Gardner - President and Chief Executive Officer

You're welcome.

Brent Whittington - Executive Vice President and Chief Financial Officer

Thank you.

Operator

Your next question comes from the line of Jason MoserFraser from Raymond James.

Jason MoserFraser - Raymond James

Hey,And good morning, just a follow-up a little bit on the last question, what's your expectations on the kind of an annual level for the pressure for universal service going forward? And also could you just talk a little about what your seeing in SME markets in your territories, that would be great? Thanks.

Brent Whittington - Executive Vice President and Chief Financial Officer

Okay, I will take the first one, expectation on annual level. rReally as we have indicated we are not seeing any major pressure in that revenue line item. I mean which you... what I would expect to see consistently going forward with regard to regard to switched access in USF for us is the continued decline in some of our switched access revenues., Nno and major pressures from a USF standpoint that we expect this year, right.

Jeff Gardner - President and Chief Executive Officer

And the second part of the question?

Jason MoserFraser - Raymond James

SME, small business?

Jeff Gardner - President and Chief Executive Officer

In our small business market again when we started out 2008, a major focus of ours was to make some investments put a greater emphasis on harvesting this small business opportunity. Wwe continue to do very well in that channel., Wwe've got really strong salesforce. Ttalking to this customers everyday, we've really improved our service levels in selling with a dedicated call center for our business customers as well,. Sso we're seeing growth in that channel, we think there is a lot of opportunity. Wwe're focused on selling them data just like we are on the residential side., Bbut again we've done very well and have seen a very little cable competition on the enterprise side especially in the small business area in the markets today.

Jason MoserFraser - Raymond James

Great. Thank you.

Jeff Gardner - President and Chief Executive Officer

You're welcome

Operator

Your next question comes from the line of Chris King form Stifel Nicolaus.

Christopher King - Stifel Nicolaus and Company

Good morning, two quick questions for you., Ffirst of all I just wanted a possible update on your CapEx guidance for the year, given your numbers into your first quarter., Iit looks like the CapEx would have to pretty much come close to doubling on a quarterly basis with for the rest of the year that I can to kind of get to the low end of your CapEx guidance., Aand I just was wondering if that's a pretty decent way to think about it at this point? And secondly with respect to your share buyback, I just wanted to confirm kind of the pace of the buyback as you see it for, the remainder of the year. Aand also just to confirm that you guys have a shorter window, at least by a couple of weeks in the first quarter, in terms of the buyback than you will for the rest of the year? Thanks.

Brent Whittington - Executive Vice President and Chief Financial Officer

Okay Chris, this Brent, I will take that., Wwith regard to CapEx, I mean, number one there is a couple of things going on there. First off we made some significant investments to improve our broadband infrastructure in 2007, those were big discrete projects., Tthey really had been substantially completed at the end of the year., Tthat's one reason we kind of mentioned that, yeah one there isn’t as much carry over of jobs from '07 to '08 that we saw. And thatmight did have impact on CapEx. Secondly our engineering team, has really just done a phenomenonal job, making smart decisions on long-term investments we need to make in this business., Aand there is no question that's driving some improvement in our results. With regards to our annual number, just to refresh on guidance we have a number of $340 million to $370 million., Sso to your point of doubling in the next quarter to get to that run rate, I think that's the right way to kind of think about it. We have seen, as I have mentioned in my comments before too, some slowdown and just housing starts in our markets and they we’rewere really not sure what's the impact of that's going to be on us this year just yet., Bbut we do expect CapEx to ramp up substantially in the next three quarters.

With regard to the buyback, really I think our actions in the first quarter speak to what, you would expect us to do in the subsequent quarters. Aand we used really the free cash flow that the business generated in addition to some assets sales to buyback our stock. We'll continue to look for opportunities like that, that are free cash flow accretive, be in mindful of other opportunities, but that kinds of what our thoughts are at this point.

Christopher King - Stifel Nicolaus and Company

Thank you very much.

Brent Whittington - Executive Vice President and Chief Financial Officer

There is a shorter window but not much, and you are welcome.

Christopher King - Stifel Nicolaus and Company

Thank you.

Operator

Your next question comes from the line of Michael Rollins from City Investments.

Michael Rollins - Citigroup

Hi, good morning. Just a quick question on where we are with the merger synergies in terms of how much is realized in the quarter versus where you are in terms of the I guess the mediuman term expectation of where I that can get to? Thanks.

Jeff Gardner - President and Chief Executive Officer

Great. So I think in Brent's comment orso I guess in my comments we talked about really the last thing we need to do with the last material thing we need to do at CT Communications was the billing-system conversion. Aand so that's going to unlock the last bit of synergies there. We are realizing most of those before the billing-system conversion. Sowell incrementally it won't be huge, but the expectation is now going forward we realize the full $30 million impact.

Michael Rollins - Citigroup

That's right. And if I guess. I can follow-up with just one other question on the long distance side how much ... ifdid the long distance pricing changes is help you in the quarter or is that something that can help revenue additionally in the next few quarters? Thanks.

Brent Whittington - Executive Vice President and Chief Financial Officer

Michael this is a Brent, . I mean there is couple of things, I mean pricing increases were really about half of the sequential increase we saw from Q4 to Q1. Some of the package plans that I mentioned were the other half. Aand that something our team throughout this past year has remained focused on, a core voice product if that there is demand for in the marketplace. Aand so notselling not only a unlimited bundles, but as we mentioned the a couple of time last year, really havinge a lot of successsful with some influx bundles, some smaller package bundles better suited to our customers base. Tthat's really helping draft drive to results that we are seeing in the first quarter and I'm continued to be very pleased with what our team has done with regards to LD revenues.

Michael Rollins - Citigroup

Thank you very much.

Jeff Gardner - President and Chief Executive Officer

Daniele we have time for once more question.

Operator

Okay. Your final question comes from the line of Gaurav Jaitly from UBS.

Gaurav Jaitly - UBS

Thanks, good morning, guys just a couple of questions. First on the access lines, I was kind of surpriseds to hear you say gross ads were actually better year-over-year especially given Brent in your comments on weaker housing starts., Sso I just wanted to knowing what was driving that? And then secondly you obviously have a lot of successful realizing synergies on the CT acquisition, just wondering what you're seeing out there, from an M&A perspective and if you're... if you see anything that's looks interesting? Thanks.

Jeff Gardner - President and Chief Executive Officer

Right.I will take that, this is Jeff. Aand so I think, yeah on the gross side I'm real pleased with what you saw there. Aand I think it has to do with the fact thator we are managing this business very aggressively. We are not a plain old telephone company. We've spend a lot of time in and our marketing and sales teams has done a really nice job making investments and developing new sales channels, getting aggressive with direct male mail campaigns., I think we are doing more precise targeting of our customer base, so if you look across the opportunity, despite the slowdown in new housing, we're seeing very good things from our retail channel., Wwe are working hard with things like with MDU and the indirect channel. Sso I would attributed that just to hard work on the marketing and sale side, something they were committed to doing is to continually to reinvent this sales and marketing model here. S so that we can improve the flow share. We’vand we have made progress even in our most competitive markets, and hopefully we will continue to do that.

On the M&A side we won't talk about specific opportunities., I will tell you that as I look across the results in this industry I am encouraged., Ffor the most part all the RLECs, despite kind of mix results in terms of access lines, what was true across the industry as they demonstrated time and again that , these businesses generated cash on a consistent basis., Sso there are good solid businesses, they have been resilient to some of the effects of the broader economy., aAnd we like our positionposition; we are the largest RLEC in the space, o our businesses running very well,. wWe've got experience on the M&A side, we have integrated VALOR and the team did a great job on that. Aand I am very pleased with the way the CT integration went. Aand so without talking about some specifics, we still think M&A makes great sense in this business. Ttremendous synergies can be generated or and you can just continue to build stronger companies, improved positioning from a scale and scope perspective. So we are hopeful there will be opportunities for us to really leverage those things in the near to medium term.

Gaurav Jaitly - UBS

Thanks, Jeff, and I have this follow-up do you think the credit markets are an impediment right now to do anything in the near term or do you think you have sufficient access to the capital market?

Jeff Gardner - President and Chief Executive Officer

Well, we remain I think our balance sheet is in great shape. we've We've got great relationships with our banks. The credit markets have probably for ever changed in terms of the kinds of commitments that you would get two years ago or one year ago even, are not going to be either going forward., bBut I think there is definitely access to credit market, you're talking about at what price., Aand I think that for the right kind of deals there is going to be financing available especially if you can do good strategic transactions.A and so and we have seen some, although be iat minor improvement in the high yield market over the last couple of months, so I think generally the environment is such they that you will see that it improve slowly overtime. so wWe'll just continue to monitor that,. tThat obviously will have an impact because credit plays a big role, but I don't think it's a huge impediment.

Gaurav Jaitly - UBS

Great, thanks. Good luck guys.

Jeff Gardner - President and Chief Executive Officer

Thank you, and thanks for joining us this morning. We appreciate that your interest in support. Mary Michaels who is... and ,who I am very fortunate to have back from maternity leave, she and I will be available for additional questions throughout the day. Thanks.

Operator

This concludes today's first quarter 2008 Windstream Communication earnings call. You may now disconnect.

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