Chris Stansbury: Yeah. So I think on that last piece, I’d want to circle back with you because, again, that starts to get into what do we think guidance is for next year. So, I don’t think I want to go there today. What I would say, Batya, is that — so first of all, the incremental raise, I think, was a really strong signal from our credit investors at their belief in our ability to turn the company around. These are smart shrewd investors who represent the market. And the fact that they are willing to raise an additional $1.2 billion, I think, speaks to their confidence in this management team and our strategy. And so, I think that’s huge. We’ll use the funds. It’s all really part of restructuring the debt. It’s not about using it to necessarily fund a specific piece of CapEx. Our CapEx is part of the thinking, obviously, but this is about restructuring really everything between now and through 2027.
I can’t — I guess I will go so far as to say that on our leverage versus where we are today, we would expect through our turnaround story that leverage will decline. It probably stays relatively steady in the near term, but then we would expect it to decline. So, I’ll go that far. I’ll give you that much today.
Batya Levi: Okay. Thank you.
Operator: The next question comes from the line of David Barden with Bank of America. Please proceed with your question.
David Barden: Hey, guys. Thanks so much for taking the questions. And I’ve got a million, Chris, but…
Chris Stansbury: And you only get two though, David, sorry.
David Barden: I know. Thanks, guys. Yeah. So look — so I’m reading this thing and — so we had this cumulative cash flow expectation from the Analyst Day in June. And now we’ve got this kind of mysterious tax refund that’s showing up. And yeah, there’s going to be some offsets, and maybe it’s a net $600 million positive. And we’re letting go some people, 4% of the corporation. That’s going to be a $300 million benefit. We’re going to cut CapEx. And even with all that, we’re still at the low end now of the guided outlook from a few months ago. And so, what we haven’t really heard is what is the actual cost, the dollar number, that’s going to get whatever it is that you’ve done with the debt structure accomplished? That’s my first question.
And the second question is, with respect to the third quarter specifically, as we try to like in the interim kind of model out what we’re looking at, what was kind of one-time in nature? I know you called out something in the public sector that was in the revenue line. It sounded like it was kind of an equipment type of deal. Could you kind of call out all the one-timers that affected the third quarter as we think about fourth quarter and as we try to model out 2024? Thank you.
Chris Stansbury: Yeah. So, as it relates to the debt — and again, because you’re right, I mean, this is a complex transaction, but to get into a lot of modeling on this call is not going to serve anybody well. What I would tell you is that when I said that we needed to cut between $200 million and $300 million of CapEx that really, I think, foretells that higher cost associated with the transaction. So, think of it this way. You have some near-term revenue pressures improving as we get into mid-year next year. Those revenue pressures are being offset by the cost reduction that we’re taking. The tax benefit, which really relates to a lot of hard work around how can we aggressively pull forward NOLs, so a bigger benefit nearer term, less of a benefit longer term.
When you incorporate that into the model, which would include all the transaction costs associated with the debt restructuring and whatnot, that’s what gets us to the math that says we’ve got to cut that $200 million to $300 million a year. So that’s — I think that answers your question, not specifically by year, but that should give you the magnitude. And as it relates to the public sector, it really was IT solutions and equipment this quarter. And again, it fluctuates around. But I’ve given you all the key one-timers for the quarter. And those things sit in the other bucket, as you know.
David Barden: Got it. All right. Thanks, Chris.
Chris Stansbury: Yeah.
Operator: Our next question is from the line of Greg Williams with TD Cowen. Please proceed with your question.
Greg Williams: Great. Thanks for taking my questions. They’re both focused on fiber-to-the-home and ILEC. I guess you’re focused on sales and marketing rather than the enablements for the next couple of years, actually. First question, are you worried about the encroachment of third-party overbuilders then coming into the space in your footprint if you’re not investing in it? And second is, if you’re not investing heavily in it, in the past, you said you didn’t expect to do any further larger ILEC sales or sales of large amount of homes. But now that you’re not investing into the degree that you said you would at Analyst Day, could a sale of a larger portion of the ILEC be on the table? Thanks.
Chris Stansbury: Yeah. So, first of all, again, I want to be really clear on this, we’re not walking away from the consumer build. We’re saying that we’re going to stay relatively flat to where we are this year. That is still a substantial investment in consumer. And I think if you look across the space with rising cost of capital, all of our competition has pulled back. So, this move is actually not out of step with what’s going on in the broader marketplace. I think there’s a real opportunity, though, to improve returns, and as Kate mentioned, with an increased focus on subscription growth penetration. I mean, we’ve talked a lot about the fact that until we got to scale on enablements, and getting that enablement factory running smoothly, which it now is, now we can scale market.
So, we haven’t really started to ramp marketing until recently. And that’s a real opportunity for us, and we’re going to be very aggressive about that. So, I’m not worried about encroachment, because I think the market has already spoken as to its willingness to invest at this point. As it relates to how we think about the business long term, I would say we remain open to any and all ideas. And again, the goal here is to build two great assets: an enterprise business and a consumer business. And what happens with those businesses over time, we’re very open to considering what that looks like. So, we remain of the belief that consolidation will continue to take place in the consumer space, and we would expect at the right point in time to participate in that.
Greg Williams: Got it. Thank you.
Operator: Our next question is from the line of Frank Louthan with Raymond James. Please proceed with your question.
Frank Louthan: Great. Thank you. So, a couple of sort of related questions. Back to lowering the fiber build, why would you choose that as far as a place to save for CapEx? Given kind of the relatively low risk and success rate of those businesses, why not target other areas of spending? Are you sure you’re cutting the right part of the business because, again, to your — the previous question, will invite some kind of competition? And then, my second question, assuming you’re going to tell me that, yes, it is the right part of the business, what exactly is the opportunity in the other part of the business? And why are returns higher there and presumably coming in sooner than, say, the fiber build would be?
