So we’ll continue to monitor it and as we get to a place of growth and stability and productivity of those teams in a way that we can share, we certainly will.
Michael Rollins: Thanks.
Mike McCormack: Thanks, Mike. Next questioner.
Operator: Next question is from the line of Eric Luebchow with Wells Fargo. Your line is live.
Eric Luebchow: Great. Appreciate it. Maybe you could touch on mid-market a little bit. I know that’s been a big focus of the company in terms of new salespeople and new logo generation. I mean, when do you think, is that more of a 2025 story when we start to see the revenue line really turn in that segment? And then secondly, maybe you could just touch on your interest in additional asset sales or divestitures as you look out, I think you’ve been pretty open about the consumer or mass markets business potentially making sense, being separate from the Enterprise segment. Is that something that you would actively evaluate? Thank you.
Kate Johnson: So starting with mid-markets, this is actually the first market segment, customer segment that we stood up, you know, our squads, our scrum teams to go after. And that’s everybody from sales, marketing, customer success, IT operations, you know, finance, billing, et cetera. All kind of circling around the customer segment to say, what are the offerings that we need, you know, what’s the price we need to win, what does the marketplace look like, you know, how do we swarm them and cover the markets, both direct and indirect, because that’s, you know, we want to continue to leverage our ecosystems for more feet on the street from a sales perspective. And all of that work happened in ’23. What’s most remarkable about that is, it set the tone and context for how we then do turnarounds in the other segments, because we got this learning mojo thing happening where, you know, the teams are meeting with daily stand-ups and weekly stand-ups and reporting back on the challenges that they were experiencing and then using an agile methodology, whether it’s building a piece of IT functionality or it’s working with the product team to say we need these net new capabilities, or, you know, the marketing team to say, how can we do, you know, better account-based marketing, et cetera.
And that method of working, you know, across functions with no silos in an agile, you know, rapid fashion has set the context for basically how we treat all the other segments. So that’s thing one. Thing two is, you know, internally, there’s a bit of a camaraderie and healthy competition. And I call my mid-markets teams the sandbaggers, because basically, you know, they’re always coming in a little bit better than they say they’re going to, and I think they’re starting to get their chops. And so, you know, we’re excited by our improvement in productivity, we’re excited about our improvement in sales and revenue et cetera. I think what we’d like to do next and where you’ll see us sort of, you know, target the guns is on the ecosystem side making sure that we have a platform that is partner-friendly so we can drive sales productivity indirect, because we all know that that’s what we need for total coverage.
So you want to handle the other one?
Chris Stansbury: Yeah, I mean, and on asset sales, we’ll obviously continue to evaluate the entire portfolio. What I would say specifically about the mass markets business is really a few things. One, that’s an enormously valuable asset and we know that. And that’s why we’re continuing to invest at the pace that we’re at right now in getting more fiber in the ground and pushing really hard to drive subscriber growth. That said, we’ve been very public about saying that’s a space where consolidation is necessary and we will not be the consolidators. So and I think you’ve seen in the last few days some noise in the industry as people are, I think, taking more active positions around what happens next with that sector. So we’re going to keep our heads down, continue to focus on execution and building out the value of that asset and we’ll evaluate as we go.
Eric Luebchow: All right. Thank you.
Mike McCormack: Thanks, Eric. Next questioner.
Operator: Our next question is from the line of Nick Del Deo with MoffettNathanson. Your line is live.
Nick Del Deo: Hey, thanks for taking my questions. I’ve got two guidance related ones for Chris. The first one on CapEx. So it looks like your midpoint for CapEx this year is $2.8 billion, it was about $3 billion in ’23 ex-EMEA, your fiber-to-the-home passings are about the same in ’24 versus ’23. So it seems like the CapEx for everything else is ticking down some. I was just wondering if you could talk a little bit about what’s behind that reduction assuming that observation is correct?
Chris Stansbury: It’s really driven by our continued focus on efficiency. And so, we continue to push on both OpEx as well as CapEx, and we will continue to do so. But it’s not — don’t view it as a signal of us pulling back anywhere. We are investing aggressively, and we’ll continue to invest aggressively in both Enterprise and mass markets as well as just the broader simplification of Lumen as we go forward, there’s an enormous amount of effort that’s taking place in particular this year around financial systems as well as operations that will dramatically improve the customer experience.
Nick Del Deo: Okay. So you’d say you’re getting a similar bang for your, or more of a CapEx bang for your buck this year than last year, and that kind of explains it?
Chris Stansbury: That’s right.
Nick Del Deo: Okay. And then second on cash taxes, it looks like cash taxes paid excluding the refund are going to be in the $400 million to $500 million, which is a pretty big number. I guess barring any change in the tax code, is this a reasonable starting point to think about for the next few years or is probably the debt transactions or other things kind of throwing it off?
Chris Stansbury: Yeah, I don’t want to try to estimate what ’25 is right now. We’re obviously not doing guidance there. You know, as I said earlier, we gave the guidance, the cash tax guidance we gave this year just because of the sensitivity in net income with all the other special charges hitting this year. I will give you a little bit here though on the interest, because I think it’s important. I think the cash interest in ’25 will not be materially different than it is in ’24. And the key thing there is just for your modeling is while we don’t have a full year impact under the TSA in ’24, at the execution of the TSA, we do basically have to pull forward interest expense. So when we look at it, that variable is going to be roughly the same, ’24 and ’25. I think that — I’ll give you that much on ’25.
Nick Del Deo: Okay. I guess maybe I’ll phrase it differently. Are there kind of one-time tax items that we should bear in mind that are baked into that guidance?
Chris Stansbury: Yeah. No, not materially, no.
Nick Del Deo: Okay. Thank you, Chris.
Mike McCormack: Thanks, Nick. Next questioner.
Operator: Our next question is from the line of Greg Williams from TD Cowen. Your line is live.
Gregory Williams: Great. Thanks for taking my questions. Chris, I realize you know you typically guide EBITDA in that $200 million range, and I’m just wondering if there’s any particular puts and takes to consider what’s driving that range this year, I know you mentioned some levers that you can pull. And then the second question is just on the ABS debt markets, if you’re looking at that in the year, now that you’ve got the clean runway from the TSA, and maybe you can leverage some of these fiber homes? Thanks.
Chris Stansbury: Yeah, we’ll continue to look at the capital structure and for ways to make it more efficient forward. So we’re not done. That was a big one, but we’re not done. I am sorry, repeat the first part of the question.
Gregory Williams: Just the EBITDA range, if there’s any puts and takes to consider, and levers to pull?
Chris Stansbury: Yeah, no, we just — we felt that the plus or minus you know $100 million was the way to go. The comment that I made earlier on just the levers we have, obviously, we’re doing a number of things, right? The primary objective is to get revenue growing as we shift aggressively from kind of legacy services to digital service offerings. But at the same time, we are fixing the internal workings of Lumen, I mean, multiple billing systems, multiple GLs, inventory, frankly, a really poor customer experience and Kate spoke to some of the progress we’re making there. So as those things get fixed, that obviously gives us the opportunity to drive more efficiency in addition to a better customer experience. And that also has EBITDA effect. So the EBITDA, we get the double benefit, obviously, of the revenue as well as those efficiency plays.
Gregory Williams: That’s helpful. Thank you.
Mike McCormack: Thanks, Greg. Next question, please.
Operator: We have another question from the line of Frank Louthan with Raymond James. Your line is live.
Frank Louthan: Great. Thank you. Just wanted to go to Slide 6 and the different opportunities you have there. Can you characterize that as what sort of potential revenue that is? Is that a multi-billion-dollar opportunity for Lumen? How should we think about that? And then you mentioned something on the recognition of the revenues for the Public Sector business. Is there some sort of timing difference in the cash flow of some of those that we should be aware of? Thanks.
Kate Johnson: Why don’t you hit the cash flow and I’ll do the —
