Windstream Holdings, Inc. (WIN) Presents Bank of America Merrill Lynch Leveraged 2018 Finance Conference (Transcript)

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About: Windstream Holdings, Inc. (WIN)
by: SA Transcripts

Windstream Holdings, Inc. (NASDAQ:WIN) Bank of America Merrill Lynch 2018 Leveraged Finance Conference December 5, 2018 9:30 AM ET

Executives

Bob Gunderman - Chief Financial Officer

Christopher King - Vice President of Investor Relations

Analysts

Unidentified Company Representative

Thank you everyone for joining us. It's Bank of America Merrill Lynch Leveraged Finance Conference. And we’re thrilled to have Windstream here with us today. So we have got Bob Gunderman, the company's Chief Financial Officer, and also Christopher King, the Vice President of Investor Relations. So we’re going to do it all in Q&A format today with Bob.

So Bob thank you so much for being with us. And I assume you have any opening comments like to make before we get into it.

Bob Gunderman

Well, I’m very pleased with the progress we're making this year. We're pleased to report that the company has grown adjusted OIBDAR for the past three quarters. So I’m very good about our financial guidance for the year and likely going to end up top end of our OIBDAR guidance range. Seeing really good progress across our two largest segments, obviously within our Enterprise segment, seeing considerable progress and selling our strategic services SD-WAN and UCaaS have been contributing so much to the growth that we’re seeing in our Enterprise contribution margin. And then turning to our Consumer business where significant reinvestment has occurred into our broadband network to bring more speeds. I’m pleased to report that really since March of this year, we've continued to grow our market share, that’s continued through November, so really have seen some points of escalation in terms of the growth rate on the Consumer business. So likely got some great tailwinds on the operations and have made a lot of progress on our balance sheet. And I think we have some really good things to talk about in 2019 as we turn the corner.

Question-and-Answer Session

Q - Unidentified Analyst

Okay great. Thanks so much. So let’s start by focusing on the Enterprise business, on the customer base and the outlook. So, overall, Enterprise is the company’s largest segment and about half of the total company’s service revenue. Windstream has done a quiet a bit of CLEC consolidation, you had paycheck EarthLink, Broadview, and then you also have the legacy ILEC footprint where you do some enterprises in that footprint as well. So as we watch revenue -- look for revenue growth, I think it's important to understand the makeup of the customer base and to what degree, particularly from the CLEC acquisition, what degree of our current customer base is really core? And how much of it is still subject to any kind of likely attrition from customers that you inherited?

Bob Gunderman

Sure. So recently we brought some additional disclosures out around our Enterprise revenue base. And obviously, there we’re seeing good progress on our strategic services. At the end of third quarter, we were about 7% of our Enterprise base was coming from the strategic services of SD-WAN and UCaaS. That was up from about 3% last year. Obviously, very significant growth rate of about 71%. As we move into the next several months, we'll bring some incremental disclosures out there around kind of the core and legacy revenue streams as well. I will tell you we do still have a sizable portion of our remaining Enterprise top line assist within that core base and things like dedicated Internet access, integrated voice and data, some MBLS, and also some of those core services. The legacy that we point to not the highest percentage of what remains within that non-strategic bucket, but things like legacy voice and data come across the legacy Tier 1 connection, for example. Those are the places where we look to move our customers into the more strategic products, obviously, and also within the core base. So we'll have more disclosures about that over the coming months. But clearly opportunity to stabilize our Enterprise top line, not only comes from the selling of these new strategic services, but converting our base of the core and legacy into the new strategic going forward. Importantly, when we do that, we typically get a nice gross margin bump because most of our customers today are sold through a resold on network situation. And if we can move to the more strategic services, we typically lower those access costs and improve our gross margins.

Unidentified Analyst

Okay. So SD-WAN, that’s actually been a big top topic here at this conference among the teleconferences, so naturally some of the technology participants as well that we have on the infrastructure and equipment side. And one of the things has been that SD-WAN, while it has a kind of very compelling medium to long-term outlook that some of the uptake has been slower than some industry participants have projected, you guys are talking about how the momentum is increasing in terms of your new sales. You’re not yet breaking out SD-WAN and the associated UCaaS revenue in your financial results. I we're about to see that maybe next year?

Bob Gunderman

Well, the breakout of strategic revenue is 7%. It's larger than the UCaaS and SD-WAN revenues.

Unidentified Analyst

Right. Okay. But - can you characterize among your target customer base? The momentum that you’re seeing and to what degree are you still bumping into [revision] and when you think that can further ramp?

Bob Gunderman

Sure. Well, as a reminder, as it relates to SD-WAN, in particular, this is a technology that we began to sell aggressively, really at the first of 2017. So still a relatively new set of services. But I think the adoption here will start to expand pretty rapidly. To us it seems to be very consistent with what happens within some of the technology evolutions within telecom. You get an early adopter community who uses see the benefits and the utilities of the solution. And then, once those customers start to make the transition, confidence builds within the space. And I think the referral will start to drive more people to it. Obviously, for us, we’re very excited about the technology because not only we think it's a very good technology for our customers, but it's also something that drives a very favorable financial outcome for us. So to the extent, we can, we will find ways and have look for ways to stimulate that transition whether it's through renewal, favorable economics on extension of service and one or two months free on terms that we get people to try the solution because the lifetime customer value for us would be better. So we look for ways to move people into the solutions where we can. But I think there is going to be sort of this natural evolution early adopters and a more acceleration of the customers who will take it. And then eventually, I think, it will become more mainstream. The opportunities that exist -- there is many reports out there about how big this can be. We’re probably looking at an industry opportunity today and its $1 billion to $2 billion, growing to $6 billion to $10 billion within a few years. So I think the rapid adoption will happen. And obviously, we see that being a big part of what we're selling today. Again, just within a year we’re going for setting from selling very little of these services to now in combination with our UCaaS services, they makeup well over 50% of what we’re selling. So we certainly see the opportunity and we’re trying to capitalize on it.

Unidentified Analyst

And if we pull this all together on the Enterprise business, how should we set our applications about timing to see when the company can stabilize and then grow Enterprise revenue?

Bob Gunderman

Yes, certainly, I don’t think, in 2019, we will cross over to growth on Enterprise top line, but I do think we will continue to make progress. The rate at which the losses in revenues, the rate at which that will move towards stability, I think will depend at some level on the rate of adoption of these strategic services, because that is the best determined of us to how we will stabilize top line within that segment. On the other hand, we do have higher levels of confidence about our ability to continue to grow cash flows that are generated from our Enterprise segment. So much of that is within our complete control. As a reminder to everyone, our largest expense stream in Windstream today is our interconnection expenses. That's $1.4 billion of our expenses on an annualized basis. We are grooming our networks. We’re trending down those costs at a rate of around 10% per year, actually in third quarter. We had about 16% annualized decline rate on that optimization. And so I think the 10% still the right kind of compound and annual decline rates to assume. But it’s a really big cost opportunity. It's one that we've really got some great capabilities out of our access team. And it solidifies our view and our confidence around what we can do with the enterprises. It's certainly not the only cost opportunity that we have, we obviously see efficiencies that are gained through automation and some of the provisioning steps that we now have are more automated for our customer base, the self-service portals that we have in place for our customers, which we think are a differentiating point for us to allow our customers to go in and review some of their services, look at their installations, check-in on maintenance request and things like that. That also reduces the need to have staffing and some of the costs. So we see all those as being tailwinds on the cost side that will allow us to sort of navigate through to the other side of revenue stability.

Unidentified Analyst

So moving over to ILEC consumer, and consumer broadband, in particular, so I think the last time you reported you had eight consecutive months in broadband net adds positive through October. Did you make it to nine?

A – Bob Gunderman

We did. Yes, November was positive, absolutely.

Unidentified Analyst

Okay. Good job there. So how you’re doing this? How are you achieving the positive broadband net adds? And is this price and promotional-driven?

A – Bob Gunderman

Well, it’s really more about the investment that we made back into the consumer broadband network. And as a reminder to everyone, we went through a couple of year reinvestments program, we call that Project Excel, it wrapped up in the middle of 2017, where we had many of our locations and brought some incremental investment to bring more speed into our broadband network. And I think now we certainly feel like we’ve much more relevant speed in terms of what we can compete within the marketplace. And so really in the back half of 2017, what we started to see once those speeds were made available was naturally the churn from our existing customer base started to go down and improve because we were able to offer more speed and retain customers to that better value proposition. And early in 2018, we actually came out and rebranded our premium broadband product Kinetic. And that also gave us a reestablishment in the marketplace of a brand that adds, I think, more relevancy in terms of speed and availability. And so from that point forward, we’ve also seen our growth -- excuse me, our gross sales go up. And so really, we’re seeing it on both fronts, our churn reductions up 13% to 15%, and our gross adds are going up about 15%, that’s what’s given us inflection. We really haven’t had to do anything irrational on price. We do it everyone else does in the marketplace in terms of promotional ARPUs. First year, $10 offer what have you to get a customer to try us, and then obviously at some point next year all these customers will kind of re-price up to the higher rate. So I would say the pricing environment right now is actually quite good and stable. We’re actually seeing some of our competition start to raise prices. So I think that sets up for a very nice environment for us to continue to keep this momentum going.

Unidentified Analyst

Okay. And what about cable refunds?

A – Bob Gunderman

No real significant response there. They’re basically acting very similar to what they've done before. In fact, one of our largest competitors, recently, I think, had made some public comments about this, as we’ve seen this as well, had begun to raise prices modestly. Nothing that I would say would be terribly differentiated. But it’s good to see some increase in price at the time where we’re more speed relevant. And I think that value proposition will still continue to resonate very well from our customers.

Unidentified Analyst

Okay. And then, how much new customer impact have you gotten from your CAF II areas. Is that continue -- it sounds like a great program, you actually get paid to rollout network to areas where there is no competition?

A – Bob Gunderman

Yes, the CAF II program certainly is a great program. One that I would submit to you has driven a significant amount of investment from our business into rural America and providing those improved broadband speeds. We’ve not yet seen a material impact on our customer flow share from those markets because we’re still in the construction phase for many of those markets to get those services turned up. I do think, as we move into 2019, that will be a more consequential driver for us. And so most of the momentum that we're seeing within the positive flow share that's something backed us right now, is more back towards the Project Excel investment. As we bring more and more of these locations up on the CAF II markets, we should see additional tailwinds that come with that. As we look ahead to these types of programs, I think, certainly companies like Windstream are doing from an investment standpoint into rural America because these programs are in place. I think it's a great recipe for what we should look for in the future from public policy standpoint.

Unidentified Analyst

So couple more questions on the cable competition. So first on the video side, so I would take traditionally the incumbent telcos have been disadvantaged versus cable once they started getting into broadband, by not really having the content, obviously. How is that -- and obviously, I think, that’s changing and the increasing over the top environment. So how important do you think content is in your consumer base? And you do have DirecTV Now product. So how is that opening?

Bob Gunderman

Well, certainly content is important to consumers. But keep in mind, when you think about Windstream's business model, we are a very rural-focused broadband provider. And so, because of the lack of density in terms of the population of the towns that we serve, I mean, our largest locations that we serve are Lincoln Nebraska, Lexington, Kentucky, places like that. And then after that, we get a lot smaller, fewer than 10,000-person towns. And so the deployment of a terrestrial-based video service, it’s like in TV product and all, there was never really something that makes sense for us. And so we've always taken the approach of bringing the most speed available to the marketplace and then use that speed to customers to sign-up with us, and if they want to bring in over the top, the new offering which is increasingly going to become how consumers consume video. And certainly what we’re seeing in the trends that not only helps us. And so we've never gone all in on the terrestrial video and then had to be a consequential content provider, but we are advantaged by the transition from terrestrial videos to over-the-top, that’s going to help our business gets stronger. We do partner with companies like AT&T and the DirecTV Now product and some of the other satellite services. It's more of a way to get an additional call into our call centers to sell that broadband product. We don't share the owner's economics if you will on that solution, but it does draw some additional opportunities for us into our sales funnels.

Unidentified Analyst

Okay. And then last question on cable competition. So SMB is a cyber cable, it’s not really advantage by the content. But it appears, industry-wide there is still has some head momentum in that segment. How can you return to growth in SMB?

Bob Gunderman

Well, we certainly believe that that we can do much better in SMB. In many ways the things that we're doing on our consumer business and the momentum that we're driving there -- there are many parts of that business plan that will have some benefits on SMB. And I do think as you look to us -- for us into 2019, we’re going to get much more aggressive out there on SMB. I think the ability to drive our strategic products, the SD-WAN for certain SMB customers make sense, obviously, the UCaaS product, OfficeSuite for us is a very, very attractive product for SMB. We believe we can do much better on SBM. And there's a lot of flow share that admittedly cable has taken from us and appears over the years. And I think for the first time, in a number of years, we had a much more attractive service offering across, in particular, our UCaaS services, but also our premium broadband speed that we can anchor to and bring a much more better value proposition to the marketplace. So look for us to get more aggressive there. We’ll have more to say about that as we turn to calendar '19.

Unidentified Analyst

So switching over to margin outlook. So the company said it’s highly confident, you can reduce interconnection costs by 10% per year, that’s another $140 million in 2019. Does most of that impact the Enterprise segment?

A – Bob Gunderman

It does, absolutely.

Unidentified Analyst

And then, so what’s the outlook for Enterprise margin from about the 22% currently?

A – Bob Gunderman

Yes, so we ended third quarter at around 22%. We do expect to get to about 24% at the end of the year. That's our goal. And I certainly do believe there is more margin expansion to come in our Enterprise business into 2019. Again, as we give our annual guidance in February, we will talk more about those specific targets. But the ability to take out interconnection costs at 10%, roughly per year, that is giving us a significant amount of confidence in our abilities to increase our margin profile within Enterprise, even despite some top line attrition still. So definitely believe that we will have the ability to continue to drive margin percentage increases, but also importantly the aggregate cash flows from that segment, we believe, will continue to grow as well.

Unidentified Analyst

And then, give us an update on the Wholesale segment outlook of revenue and margin?

A – Bob Gunderman

The Wholesale segment for us, obviously, has been a segment that does decline. Admittedly, I would tell you this year has declined at a slower pace than what we frankly had thought at the first year. Our sales team within Wholesale has done an outstanding job monetizing the extended network and the new routes that we put out into, primarily the western part of the U.S. We may concert an effort to reinvestment over the last two years to expand routes to try to attract more business from the content providers from some of the cable companies who are driving Enterprise services out in those markets, and then getting into data centers and points of interconnection because that’s really where the content and the large wholesale opportunities come. And I think our team has done a really nice job of selling those strategic services. It's certainly true that we still have a decent amount of legacy services that will attribute within Wholesale. I do think going forward, the rate decline on top line and the rate decline on those margins will get better, but I don’t think that in the very near term that we’ll cross over to growth on Wholesale.

Unidentified Analyst

So moving on just to the bridge to 2019 EBITDA growth. Now the company has said that it expects to achieve adjusted EBITDA growth. But it sounds like in all of these segment there’s still going to be some headwinds on the revenue side. So can you bridge us to how much EBITDA growth we can expect? I know you haven’t given guidance yet, but you have cited $140 million in interconnection expense, you've got $35 million of additional synergies, I think its achievement. Do some of these costs get reallocated to new initiatives or do most of these fall into bottom line?

A – Bob Gunderman

Those will fall into the bottom line and really be sort of a replacement and an overachievement to get passes the top line attrition. So clearly we still feel comfortable with the goal of growing EBITDA, OIBDAR in 2019. We’re growing OIBDAR right now, three quarters in. We’ll be at the top end of our guidance range for OIBDAR for this year. And so we do have a lot of good tailwinds in particular on the cost side. They give us that confidence about next year's plans. And really I think that that the pace at which we can stabilize top line, we don't have any unrealistic expectations about next year's revenue plans in terms of making those representations around OIBDAR guidance. To the extent that we can move faster on both the consumer and the Enterprise side to stabilize that top line, that would be upside to our plan.

Unidentified Analyst

CapEx, so I think you’ve guided about 13% to 15% of revenue range, but can you budget out dollar wise how that breaks out maintenance, success base and then any kind of special projects or upgrade?

Bob Gunderman

Yes, we do have some supplemental disclosures in our prepared documents on that. A good chunk of our CapEx is maintenance CapEx. It's in the 30% to 40% range. And then when people ask the question about your program CapEx or investment CapEx, I sort of think about those buckets as we don’t have a large program CapEx going on right now like we did a couple years ago or year and half ago on Project Excel where we were reinvesting that time a couple to $300 million of reinvestment back into the broadband network. That was a program that we specifically set aside for catch up and get more competitive. Now what we're doing on the broadband side is really just continue to bring incremental speed augmentation. And those improvements like across our footprint where we came within a more sustainable level of CapEx spending, certainly don’t want to miss the chance to mention that. But by the end of the first quarter, we will take another step function up in terms of our 100-meg speed availability. We will go from the 15% of our addressable households are 100-meg available today to 30%. That’s all within the balance of our existing CapEx kind of run rate. So we’re finding ways to be more efficient with our CapEx spend and finding ways to get incremental speed out there, and get more competitive with our costs and sort of the outsized program CapEx right now.

Unidentified Analyst

So free cash flow outlook, so this year the company has had, I think, quite a bit of extraordinary spending. So I think year-to-date, its roughly about $130 million and that includes integration of legal, and you got like restructuring, you got rebranding consulting, network optimization as well as integration CapEx, so year-to-date about $130 million. So if I take that out of the free cash flow guidance for the year, they are going to be about positive $10 million this year because you had all these expenses. A lot of these items are going to drop off in '19. And I guess the root of the question is what trajectory should we expect for real free cash flow generation going forward?

Bob Gunderman

Yes, let me correct you on just a couple of those numbers on EBITDA. The adjusted free cash flow guidance that we have is $145 million, and then we’ll have roughly $95 million of other adjusted type items to get to our real free cash flow outcome for this year is $50 million. And the composition is as you talked about the categories of merger and integration expenses and some bond and fault litigation costs that we guided to at the beginning of the year. So those will be in the roughly $75 million range. And then the netting of both our restructuring type costs offset against some positive working capital will be about another $20 million of cost. So that’s $95 million off of the $145 million to get to the $50 million. And so looking into next year and actually I would tell you even if you looked in the third quarter and looks up around the reporting here for Q4, those costs are coming down. And then no doubt we have been in a period over the last two years of a higher integration cost period. And certainly a big chunk of that was to activate synergy realization within the last year -- we obviously have been integrating two large acquisitions the EarthLink acquisition and Broadview. And what I guided to and whenever we did those acquisitions was roughly a 1x synergy -- sorry, a 1x integration costs and supported the synergy, right. So I think about one year to get to the annualized on a run rate basis. That's still we’re tracking two of our three year period. But we know that those costs going to come down and they will start to come down considerably in 2019.

Unidentified Analyst

Okay. Update on the asset sales. So the company has said about $100 million to $200 million of dormant fiber assets available for sale at multiple parties has expressed interest in that, but they spent about a year, and we’ve seen nothing super notable in terms of sales. So what’s going on there and are you still confident that …?

A – Bob Gunderman

I am, yes, I am. We’ve got $20 million of the range we gave of $100 million to 200 million. These are dark fiber assets that are, basically think about as excess capacity that we have within our network where we don't really have to have this fiber under our ownership to continue to be a good competitor in these markets. And so I think there's obviously been some noise around the situation this year that we’ve had some engagement in start and stop on some counterparties, but the activity levels are actually quite high right now within our discussions. And I am still very optimistic that the conversations that we’re having support the valuation ranges and the possibilities of getting to that range. So no, it’s been a little bit longer coming than what everybody was hoping, including ourselves, but it’s not an indication about the interest level. And as we’ve -- we got a message to kind of at middle part of this year the pace at which these are going to come, I think, are going be more in the singles and doubles kind of categories and one big transaction is fixed for the whole thing. But again, our business development team is very, very active with a number of counterparties. And I still feel good about us landing some sizeable transactions.

Unidentified Analyst

And so given that we’re at a debt conference you definitely have talked about the debt. So the next few big debt maturities are the revolver and about $1 billion outstanding there due in 2020, $1.2 billion term loan due in 2021, can you update us on your plans? Is there a timing to refinance these? You also have some limited second lien capacity remaining. Is that part of your tool box that you plan to use?

A – Bob Gunderman

Sure. Well, as a reminder, in the past year, we’ve refinanced about $3.5 billion of debt, most of that moving out some unsecured bonds. We now have no material unsecured debt maturities until 2023. The modest amount that we’ve sitting in 2020, and 2021 is around $70 million or so, each of those years. The second lien secured debt capacity of $250 million, I think is an option for us to consider to potentially use -- to handle those subs as free cash flow from operations. And then after that obviously the next set of refinancing steps that we need to take care of would be the secured refinancing, clearly, as you said the revolver maturity in 2020 and then the term loan in 2021. We've been very active in discussions with our bankers this year. They’ve been very supportive of us and then very much informed about our refinancing steps and many of them have been part of those steps, and have been very constructive and good partners for helping us get through that. So I do think we have a good opportunity to refinance that revolver in the near term and then opportunistically refinance the term loan. Obviously, the way that we would look to do that in addition to this using after sales to pay down the revolver, for example, in term loans in the near term. But the ability to go out and tap first lien capital to refinance the revolver and then ask for that extension, I think is really the game plan. And then as we obviously look to getting the court decision, that I think gives us the best position to sort of have the best REIT on the market as to where our debt will trade. And so obviously we’d love to be able -- we’d have love to been able to actually have taken those steps already, but we’re still waiting for that decision to come to give us the best view as the market refinancing rates.

Unidentified Analyst

And then on the secured side, I mean, is there a potential to refi a part of that versus secured bond, either first lien or second lien?

Bob Gunderman

Yes, we will look at both whether it's bonds or loans. Again we will look at the market indications where that’s going to trade after the favorable court decision, and then we'll decide what the right approach would be whether it's what type of debt is internally used to refinance.

Unidentified Analyst

And then based on what you’re lawyers are telling you or what anyone else is telling you, what are your expectations on when there will be a decision from the judge in that bonds and fault litigation with the note holder during the [indiscernible]

Bob Gunderman

Yes, certainly. The question gets asked a lot for obvious reasons. The trial wrapped up in July. We still feel very, very good about our case, our position. We feel very confident in our positions and prevailing. Obviously, we’ve not received a decision. We clearly look forward to getting that so we can get on to refinancing the balance sheet. We do know that this judge has a very busy docket. In particular, know right now there is each part of it very publicized case. Certainly, we would love to see that decision come sooner rather than later. But like many of you, that’s about the extent of our insights, and we don’t have any real control about when that decision might come. Other than to say again spend several months and that we seem to be within the window of reason that decision should come very soon.

Unidentified Analyst

Okay. So you guys have been working really hard to reduce costs operate the business more efficiently, but one of your largest fix costs is actually the lease with Uniti that's about $650 million annually even some escalators in there. Even though much of the business that is supported by that, those lease assets, the ILEC is undergoing set to our customer and revenue decline. And in particular the high margin voice business is on a lot of the assets. Do you think about ways to renegotiate that lease?

Bob Gunderman

Well, certainly, we're comfortable meeting the obligation that we have. And, look, I mean, that the opportunities are potentially drive a strategic discussion that could give us some outcome of lower fixed obligation or some other consideration of value. It’s certainly something that we think a lot about. There is obviously consideration from the counterparty about that. But where we sit today is we’re comfortable that lease is certainly something we can sustain and meet the obligation. We actually have a very favorable view of our operations and improving business profile. You mentioned ILEC business and secular decline. I actually have a different view. Our business was on the upswing. We certainly see that is improving. But having said that if there are ways for us to work together to get to a more rational structure that could be positive for both parties, we're certainly open to that, and we engage occasionally on those topics, and not much more to say about that right now.

Unidentified Analyst

Okay. We get about few minutes left if there is anyone in audience who got any questions. You kind of made a self acquisition about a year ago.

Bob Gunderman

Self?

Unidentified Analyst

Any thoughts about potential consolidation?

Bob Gunderman

Well, certainly, M&A has been an important tool for us. We like the better word over the history of our company, certainly scale and scope and new product assimilation in network and all of that through M&A. It’s certainly something that's been important to us. I can tell you that 2017 was a particularly busy period for us in terms of acquisitions with the EarthLink transaction and then the Broadview transaction. Both of those transactions were important for different reasons, but really good sense of assets and businesses to assimilate into us. We now have the tools that we need to compete. I think we’re showing the ability to do that, both through the stability that’s being driven within our Enterprise business and also through our consumer business. Obviously we’ve done some very small acquisitions this year, call it $30 million or less type things that have been more of an assimilation of existing customer bases into our much larger business and driving out some efficiencies by doing that and given us the ability to go sell into those customer bases on these strategic services. And so, I think given where the equity is today which is certainly how we view the currency for acquisitions, any large scale M&A for us as an acquirer sort of tough to do. Don’t think we’ve to have that to be successful to drive both improvements on the debt side or the equity side. But Windstream is always open-minded about strategic opportunities, and whether that’s an opportunity that comes with us acquiring another business to add to the portfolio of assets that we’ve under management to improve the business or being part of another transaction as an acquired company. Those are things we always consider and things we are always open to the benefit of all our constituents. So can't really say that, I think either of those are those are very probable right now based upon the landscape. And so what we're most focused on right now is just really driving significant improvement in our operations and driving value through that way.

Unidentified Analyst

Okay. And then just in terms of potential tuck-ins, when, I think, post trial outcome and potentially you get some relief on your -- on debt and equity currency, are there any product holds that you believe could be sold through smaller acquisitions?

A – Bob Gunderman

Well, certainly, on the Consumer side, I mean, it’s more simple right? I mean you’ve the network you invest in it. So I don’t think you can really look at any product holds there. On the Enterprise side and even Wholesale, I’d say, I think we have our product mix that works and then selling very well. Are there other companies out there that would potentially increase your concentration into those strategic services that would push the business model in the transformation faster? I think the answer to that is yes. And so those are the types of companies or opportunities that we might look to, but again we have the tools we need to win and those would be more opportunistic.

Unidentified Analyst

Okay, Bob. Thank you so much for being with us. Happy holidays.

Bob Gunderman

Thank you as well.