Yet Another Value Podcast - Ben Claremon on $LUMN

Episode Date: September 27, 2021

Ben Claremon, Partner at Cove Street Capital, discusses his thesis on Lumen. Lumen is a complicated story and a bit of a battleground stock, but Ben think the company is trading at a large discount to their asset value and is making moves to unlock that value.Ben's first YAVP appearance on Viasat (VSAT): https://youtu.be/Otw0oWvuhdUBen's Compounders podcast: https://open.spotify.com/show/3Qbcrw84MDaJ3CZUNuqOxu?si=vD-uIjqVR4G_SFwH_ALVEg&dl_branch=1Chapters0:00 Intro1:35 Lumen Overview5:55 Why didn't Lumens' old management team believe in Fiber?13:30 Discussing the proxy statement and management incentives19:15 How can telecom investors get over their Lumen baggage?25:15 Looking at Lumen as a special situation35:00 What would Lumen look like if they sold all of their consumer business?37:05 Lumen's valuation and sum of the parts39:15 Lumen's looming dividend cut?47:00 Government subsidies (CAF going away; RDOF replacing it?)54:40 Why invest in Lumen vs. a cleaner story like Frontier (FYBR)1:03:25 Closing thoughts

all right hello and welcome to yet another value podcast i'm your host andrew walker and with me today i'm excited to have for the second time my friend ben clarkman ben how's it going i'm doing well happy to be back great well hey let me start this podcast the way i do every podcast first a disclaimer everyone should remember nothing on this podcast is investing advice please go do your own work uh the second way i start this podcast is with the pitch for you my guest uh people can go listen to our first podcast to hear the full pitch but i just want to add on to it you recently launched a competing podcast, which I'm going to forgive you for, but it's called compounders, anatomy of a multi-bagger. I've really enjoyed it. You know, it's made me like you

even more as an investor. You've had some companies on that I thought I was kind of the only person following, and you've had them on. And I just really enjoyed them. I've learned so much from them. You know, I would say for listeners, the Stone X one is a company that is extremely underfollowed. Go listen to that. I think you're going to really enjoy the CEO, the way he talks about industry, creating value. There are a couple other, the Tigo one, everyone knows cables close to my heart. I hadn't followed Tigo in a while, but I thought he came off incredible. So, look, you interview small to midcap companies, probably a little bit underfollowed.

You interview the CEO's in-depth, kind of like you and I are going to do right now for about an hour. So I think people should go check that out. That's my pitch for you. I realize that was a big softball one, but I just want people to know, check out the link in the show, go check out the confounders podcast. That very softball pitch out the way, let's turn to the company we're going to talk. about today. The company is Lumen. The ticker is L-U-M-N. And I'll just flip it over to you.

What is Lumen and why are we so interested in them? Yeah. So I don't even know where to start. Let's start here. So this is a very contentious stock. This is a battleground stock. There are, I mean, the derision that I receive whenever I bring this up with outside investors is high. So that can either mean that we are crazy and investing in something that is a value trap and won't make any money, or there's the opportunity for something to be underappreciated about it. We think it's a ladder, but I recognize, and I didn't come on to the show just to like, whatever, mess with people and pitch something very controversial. This is the largest position in the strategy that I manage. So, you know, we own the stock, and it is.

it is a very important piece. So what is Lumen? So Lumen is the former CenturyLink, and CenturyLink is basically a, Lumen, change the name change after CenturyLink, but CenturyLink was basically a roll-up of, you know, telco assets.

You know, CenturyLink made it, before acquiring Level 3, made a number of assets. They bought Quest and they bought a bunch of other things. The legacy CenturyLink business is and was mostly a consumer-oriented business. Think everything that everybody hates declining wireline. So think phones, which, you know, who in the world still has a landline these days. And so that business is a high cash flowing, high-margin business that is declining at a relatively rapid pace.

They also, within their markets, the old management team did not. really believe in fiber. So in the things that are doing well at Charter and Comcast where people invested in a plant and are like passing homes and signing up people for broadband, which is what cable companies now sell. They don't sell TV. They don't sell phones. They sell broadband. They didn't do that. So what you have is a pretty legacy rural telco that just hasn't been able to grow and and, in fact, has been shrinking. And so in 2017, they married that gem with Level 3, which is one of the largest fiber companies in the world.

They have four, prior to some asset sales are doing this year, they have about 450,000 route miles of fiber. That goes down, that goes anywhere you want to go. That's APEC, that's EU, that's South America, which is an asset they're now selling, and that's North America. you know, they are the backbone for a lot of things. If you go back to level three's history, it was a combination of level three in global crossing.

You know, I wasn't investing at this time and you can go back and read about those deals. Like, you know, there was a fiber glut and global crossing, you know, went bankrupt and and this is what came out of that. And so, you know, they have subsea assets. They have transatlantic and trans-Pacific assets that we think are actually really compelling. But, you know, they're kind of buried within this business that going back to 2017 probably should have never been put together. Didn't make sense to combine, you know, literally like an old wireline company with a company that was like the backbone of what our future technology was going to look like, right? And so how much of the world, especially in a COVID Zoom world, how much of our world travels on fiber, it's incredible, right?

But, you know, so you have a very legacy culture, kind of like just everything you can think about the old telco, merged with a more entrepreneurial company, which was run by Jeff Story, who's now, thankfully, the CEO, the combined company, but, you know, just, just a mess. The only saving graces was that there was a huge amount of cost savings between the two, all of which have already been realized. And so you have a high margin business that has not been able to grow that was over levered and, you know, really was an orphan because of all of the things that I just discussed. Yep. Hey, Ben, let me just start with a quick question. So Central Link, you know, you had this old world, rural, not rural, but old world telecom, lots of copper, lots of landline, all the DSL. And you said the old management team didn't believe in fiber. So I have two questions in that. A, sitting here in 2021, it's laughable that people didn't

believe in fiber, right? So my first question was, A, why didn't they believe in fiber? Because I'm sure they had reasons, right? Even if you disagree with them, I'm sure they weren't just coming out there and saying it for no reason. And then B, it strikes me as strange that a person, a management team who didn't believe in fiber would merge with level three, which is basically all fiber. Now, that's enterprise fiber versus when I think you and I say Central Link didn't believe in fiber. We're more talking consumer fiber to the home versus enterprise fiber, but still a little bit of strange mix. So what do you think about those two questions? Yeah, I mean, I don't, I can't go into the mind of the old century link management team,

but here's what I can say. Our sense is that the wireline copper business was a high margin, high free cash flow business. They didn't really have to invest in the plant significantly to maintain it. And so, you know, this was a company that paid a dividend. and, you know, and when they measured level three, I believe that they inherited that, that structure. So I think this was more of a, this was not a management team that was looking around the corner. My guess is at the time, fiber was expensive, very, very expensive to roll out in their rural markets, right? If you're, if you're, if you're, if you're going to wire downtown Seattle or downtown Denver, there's a different cost than then, then wiring the farmers who are, you know,

20 miles outside of the 20,000 person town, right? And so I think the costs were possibly prohibitive. And so maybe from an institutional standpoint, it just wasn't of interest. And look, I think why level three? Because level three was a shinier, cooler asset than anything they had. And how many times have we seen companies try to get into the cooler space, right? They either missed the boat or, you know, didn't have their right footprint. And so they try to buy into an asset.

And then you get a culture clash where, you know, the legacy telco guys just do not know what to do with a very entrepreneurial organization that was a roll-up of a lot of different assets that was run by Jeff Story. And, you know, it was just typical prototypical. It's like almost like AT&T buying anything. It's like they're just found. to screw it up because of the different cultures. And so I think a lot, that's a lot of what happened. And like, I will mention that, you know, we've talked to people who are close to Jeff Story, who's now the CEO, and he came on as C-O originally.

Jeff had a heart attack. I don't call it five or six years ago. They don't, don't quote me on that. But like, within the last decade, he had a heart attack. And, like, we think he was probably on his way out. Like, this was his not like selling level three for 34 billion. dollars, you know, after like building this thing, you know, that's like outsider kind of stuff given where that thing came from. And so I think he was probably on his way out until he went

inside and realized like, oh my God, the guys from Louisiana, which is where CenturyLink was originally, it was originally from. Like, just like this is not, this is not going to work. And so so that's why he's still here. But I think getting to that point, like this is not level three was his baby. Century Lank slash Lumen is not his baby. He is not like inextricably tied to this thing. And I think their recent actions would suggest to you that like there are no sacred cows here. And we'll talk, we can talk about the assets. Yes. But you know, just going to, A, you said the Central League guys from Louisiana and as a New Orleans native born, I'm not going to take too much crap about Louisiana. But just going back to the old management team,

not believing in fiber, you know, today it's easy to make fun of them. But I will say Look, he had a high margin business, and if you look at the fiber rollouts from the late 2000s to the early 2010s, you know, you're thinking Google, Google fiber, AT&T universe, Verizon Fives. It actually did kind of prove out that all of them were overpriced and the returns on capital there were pretty poor. And I could see how, you know, it's one of those classic dilemmas. You're a guy with high margin business and you're presented with this new product. Do you invest a lot of money, have to cut the dividend? Your board's probably going to fire you. Your investors are going to be screaming.

I mean, and maybe it was just damned if you do, damned if you don't, but. I think that's fair. I don't think that's good. I mean, you're right. In hindsight, it's really easy to make fun of them. I think there were a lot of other issues in terms of operations and how it was run. Lack of investment. But yeah, that is, you know, you make.

Jeff, go ahead, sorry. Oh, I was going to, Jeff, the new CEO, if I'm remembering correctly, I should have checked the 13Ds before I have Tom. But he, he was the CEO, he was named the COO when the merger went. through. If I'm remembering correctly, I think it was Southeastern who filed the D that ultimately got the old CenturyLink CEO to kind of agree to retire in a couple months and Jeff to step on in the CEO. So he's like a hand-picked activist. Hey, this is the guy we want leading this company. Yeah. I mean, I think Southeastern and we have a relationship with Southeastern and talk to them to the degree that they can't talk because they are a D-filer, but we have a, and this is something

we have an open dialogue with them about. Like, yeah, I think Jeff is, he's not their guy. It's not like they brought him in, but I think they believe in his North Star that this is a guy who created an enormous amount of value at level three, right? Sold it, yeah, maybe, yeah, could you argue that maybe CenturyLink was not the right buyer? And Jeff, you know, got a really nice multiple for that business. And so this was kind of like his way, his swan song. I mean, that all of those things may be true. But, that doesn't mean that he's not the right guy to continue to figure out how to create value from here. And so that's, I think when I look at this, there's a lot of things that I think

are misunderstood and we can get into those. But if you know anything about Coast Street, you know anything about me, like I'm really focused on people's. What are people's incentives, what are their motivations? What is their North Star? Do they, you know, do they just, you know, are they focused on EPS and, and I don't know, golfing or they care about free cash flow returns on invested capital and have, you know, a private equity or John Malone's style understanding of how to create value for shareholders. And I think Jeff does have those things. I will say and that he doesn't always, you know, on public conference calls or Southside call, the Southside conferences, I don't necessarily know if he comes off as like, you know, like Maricio, you mentioned

Maricio Ramos, who's the Tigo CEO who we've interviewed, like, yeah, Maricio, like he, He gets it and he will, he's not shy about it. Jeff's just a little more reserved. And I think people think of that as like some form of weakness or like a lack of conviction. We don't think that's what that is. So, you know, these are the intangibles with any investment that, you know, to get right and to make a lot of money. I think you need to be right about the business value and the people. We think we have the people here who understand how to create value.

The market clearly does not think that. That is like, I don't think there's any argument about that. And so if you're thinking about our contrarian position, it is that look at how he is incentive, open up the proxy statement and look at what the number of zeros he could add to his family's wealth if they could sell this company for anything near what we think it's worth. Why don't we start there? How is the incentive on it?

So what is the proxy statement, for those of us too lazy to open the proxy statement up, what is the proxy statement telling us? Yeah, the proxy statement is telling us that his change in control is, is, what was it, I think, in the $30 to $40 million range, but that was on a price, that was at a stock price struck at the, I believe it must have been struck whenever the proxy was issued. So, you know, the stock is up a fair amount since then. And then if you sell it for what it's worth, those shares that you get in a change of control or when your shares vest, right, you get the current value, not what the proxy, not what it said when the proxy was struck. So, you know, we're talking. $100 million, like if you think that it's worth what we think it's worth. So, you know, that's that's that's real money for anybody. Can I provide a slight push back there? So I don't disagree, but you know, most CEOs of big companies have big change of control agreements. And that doesn't necessarily, just in my mind, it doesn't always incentivize them to sell because

when you sell like, yes, you're going to get a boatload of money, but you probably already got more money than you know what to do with. Your kids know what to do with. You get that on a yearly basis. And when you sell, you do lose the prestige of being the CEO. you know, your banker friends aren't going to call you up as much. You just lose a little bit of prestige. So, like, I kind of have always like charter, which is a position I've been involved with for a long time. You know, when their stock was at 180, they sent incentives that said, hey, if we can get

to $500 per share within five or six years, which is an unbelievable IRA, you know, our CEO will basically make a billion dollars. So, yeah, he'd get rich through a change of control and stuff. But even without that, he would make a lot of money. Does he have incentives there just to kind of deliver? liver around anything like that? There's nothing remarkable about their proxy that like that, right? And look, there are puts and takes with that.

If you incentivize people based on a share price and COVID happens, right, and your stock gets cut in half because of nothing you did, right? All of a sudden, those are not going to get hit. All of that's underwater, right? So maybe the CEO stays, but what if that goes further down, right, into the organization? And all those people are not getting anything. So, look, we can have an entire podcast on compensation and the puts and takes there. One day we might do that.

I mean, I don't think there's nothing remarkable enough. Like, the things they care about are just the deep without down free cash flow. And, you know, those are positive things for us versus like, I don't know. So there's some of those, plenty of other things. But this company needs to grow, right? If that and it's where it's where they fail, it's where, I mean, I'm as critical of the, not not the execution, but of the outcome of this merger as anybody, right? Which is why I think they needed to be undone.

But whatever it is, this company's not been able to grow up. And that's both on the legacy century-link side. And that's on the frustration that I have with the company and the frustration that in the market has with the company is at the level three side. And the business side, that's Quest and level three, they haven't been able to really move the needle either. And so that, I mean, that's really what's important for us as shareholders.

And, you know, and I think that team knows it. But to get to your question, you made a broad statement, and it is absolutely true that the change in control can be, can be meaningless in certain situations. One way to make an enormous amount of money is just to stay in the seat as long as you possibly can. And so absolutely true. I just think that Jeff, given his age, given the heart attack, you know, given that stuff, like this is not, we're not going to see him in his seat in 10 years, right?

There are certain things, you know, not to talk about his health or anything like that, but just like my point is like there are certain things that are suggested to me that like he's not just going to want to sit in this seat forever. And look, maybe they hand it to somebody else. But from a, from a personal perspective, when you're trying to figure out, does this person have the incentive to sell? And we can talk about Lionsgate too, because it's the exact same thing. Those gentlemen are getting to be in their late 60s, right?

And so there's just a, there's a point. And I'm actually writing my Q3 letter to our investors. And there's this, I'm going to introduce the idea of a stock maturity, right? So bonds have a maturity. Stocks don't, in theory, have maturity, right? But there comes a time in this life cycle of a company where there is kind of a maturity. And I think both Lionsgate and Lumen are getting towards their maturity, where there are things being considered that may not have been considered five years ago. And there are outlets for value creation that are now on the table that weren't.

And so that's really the idea. And we can talk about the things that have happened that are, that are suggestive to me that there are, that things are in motion. You know, and I have found the best sign that somebody could be a seller or is a seller or something is their history. You know, my favorite thing is a new CEO joins a company that's kind of in turnaround or something and you go look at their, you go look at their background, Dan, 10 years ago, they joined a company and two and a half years later they sold it. Then five years ago, they joined a company and then three years later they sold it.

That's the best sign. And here, Jeff, guess what? He already sold level three once, right? So I would say he's probably willing to seller. I want to dive into all the different parts and the complexity. of these years. But, you know, I spend a lot of time in telecom. So let me just give you, when you and I were talking about doing a Lumen podcast, let me give you my background because I think it's how pretty much every telecom investor looks at it, right? Once a year, somebody will

ping me on Lumen or I'll get around to look at it and I'll say, hey, that's pretty cheap. It's in your wheelhouse. You've done a lot of work on this. Copper assets can be upgraded to fiber at some point. They've got lots of enterprise fiber that's valuable. They even talk of a game on capital allocation. Let's give it a look. And then I'll spend, you know, half a day. a day, whatever, and I'll say, oh, this is a mess. It's down 20% from when I looked at it. It's really hard to look at all the different pieces. I'm not sure what's going on. I'll probably just pass. And then a year goes by, I do it again. It's down another 20%, all that sort of stuff. So I feel like I've been repeating this pattern. What would you say

to investors like me who've been looking at this company and just saying it's a mess, it's too complicated? How do you get over that baggage for them? Yeah. So you just defined a value trap, right? Which is like every time you look at it, it looks cheap, but it's down 20% at every time. And so let me say a few things about that. I would say, and I'll bring up lines gate again, with both of those companies, this long of consistent futility opens up alternatives and forces alternatives that were not on the table before. Right. There's it. So, you know, our founder always says, like, what is the present value of your operating plan and what is, you know, what could you get today for those assets, for this, for this company or these assets? And you weigh those two

things as a management team. And, you know, as we said, there's a lot, there's plenty of management teams who are inclined to just give it and keep going with the present value of their operating plan and saying, well, this, this time it's going to be different and we're going to be able to grow up and all that stuff. But, I mean, this has been, this has been, this has been, the closest in November of, sorry, 2017. So we're coming up on four years since the deal. I think the stock was in the 30s. I mean, it's $13 today, right? This is on a relative basis, it's a slaughtering, but even on an absolute basis, it's a huge, huge capital impairment that we've seen. Right. And so that, to me, that is one of the reasons why this time may be

different. And let me say the other thing that I think is really indicative of why things are different now. So when we first invested in, so we were level three shareholders and CenturyLink bought it, we were out. And we looked at this and I think Eugene and Jeff my colleagues were like, this doesn't make any sense. Like we don't think, like this looks like a really good deal for level three shareholders and it looks like a really not a particularly smart thing for because my guess is, and I'd have to go back and look, but my guess is they had the Century Link given the multiple they were trading at paying the paying the multiple they did for level three that's like the multiple arbitrage you don't want you're trading at a low multiple the other one's trading

in a high multiple that is not what we call it credive right because what happens is the good company's multiple like the good company's earnings get get mixed with yours and all of a sudden the whole the multiple for like the multiple comes down right and so um or or the weighted average multiple is not particularly attractive but anyway um so this company so So when we invested in CenturyLink and then when it turned into Lumen, this was a cheap stock, it was a small position, it was kind of like, we think the asset values higher, but we don't have the conviction to say this is a five or a seven and a half or 10% position because it was kind of just like a mean reversion trade.

Like this is too cheap, something will happen. If they can get the level three assets to grow, we'll make some money. you know, it probably shouldn't trade at five times deep, but I should trade at six and, you know, you benefit with a little bit of growth and mean reversion in terms of the multiple. Well, that hasn't happened, right? And so that's why we are where, that's why we are where we are today. But what has happened is this company, I believe, and this is, this is our contrarian position,

is that this has become a special situation. So when Eugene and I, my colleague, were on the Investors podcast last year and I, and I said the merger between CenturyLink and Lumen is being, and, sorry, and level three is being undone. Everyone said we were crazy. The feedback we got was we haven't, the company said, well, okay, we haven't said that. So like, just let's, let's remember that. And then every, every investor said, that's crazy. There's all these synergies there. Why would they do that? They just did this deal. And what has just happened, right? So for people who don't follow this, They just did a $7.5 billion asset sale of legacy century-link assets to Apollo.

And so the reason why this is a special situation is because I don't personally think, and I could be wrong, but I would say we have a pretty good track record over last year of anticipating some internal movement. I think that there's still something going on. There's one more shoe to drop, maybe two, right? And so the point is that this is a special situation. situation, I believe, firmly believe. And if, and if you've heard what Jeff, what we heard secondhand about what Jeff story said when he listened to that podcast, he said, these guys get it.

And so our position is that this company will not be in the exact same form that it's in today in, I don't know, call it 36 months, maybe it's 24, maybe it's 12, maybe it's two months. But in some time frame, hopefully within our investor's appetite to hold, to invest with doesn't hold the stock, that this will turn into, this will be a special situation where the value that we see in the assets will be, will be realized in some form. So let me step back for a second. There's just, you know, one of the tough things with Lumen is there's so many different parts to it. It's, and if we're going to go an hour, it's tough to cover it. But so over the past, actually, it's, I was going to say a year, but it's actually

the past four months, three months. They've done two big deals. They sold, they sold about seven billion worth of what I call I-L-E-C assets, that's rural telecom assets, basically, to Apollo. Those were all, those were pretty much all copper assets that Apollo is going to buy, and they're going to, they want to run. Yes, milk it a little bit, but they want to run, hey, we're going to upgrade these copper assets. The fiber, make them much more valuable. You know, fiber goes for $500 per home.

Fiber goes for $3,000 per home to pass. Copper goes for about $500. If you spend $1,000 to take a 500 assets, it's a $3,000, hugely value created. That's what Apollo wants to do. Lumen sold those assets because they say, hey, we've got lots of other copper assets. We'll take these proceeds and we'll go make all of our other copper assets fiber and those are actually better assets. And then the other deal they did was they sold a bunch of the old level three, South American assets, I believe, South America, Latin American assets to, that's all enterprise fiber. They sold it, I think, was to Stone Peak for about nine times EBITA and they're going to use that debt.

So those are two big deals. I mean, we just did $15 billion in asset sales. But what you're saying is you think that there's more on the horizon. So what would more look like? What would another deal that they do look like? Sell the whole company. So more old level three assets? I'm not sure who wants the whole thing.

I have some suspicions that there are people who would be interested in the enterprise fiber that level three and then Quest own. But I'm not sure who would want the consumer assets. So you could do it a number of ways. APAC? So the question is what's left. So if you listen to Jeff's most recent presentation, I think it was at the Goldman Conference, they talked to him about, like, is there anything left that's non-core? And he said, for sure, there are still things that are non-core. So what could that be? That could be the EU business of level three. I think that is probably a pretty good business where they have a pretty good asset base of fiber. And so I don't know if that's non-core,

But APAC, potentially just like Latin America, which these are all level three assets, could be for sale. I tweeted out, I mean, he was pretty clear. He says, Asia Aspect, we don't own every part of the network. And then he starts comparing Asia to Latam. I mean, I don't think he could have been more clear that Asia might be on the selling bottom. So, I mean, I think you, if you want to own, you want to own both the, you need a bunch of endpoints. You don't just want to be a wholesale provider, I think. And this is, you know, parodying my colleague, Eugene, a little bit because he knows this whole

industry better than I do. But, like, you know, one of the reasons why Latin America was not a great asset for them is because they just, they were like a wholesale provider provider, fiber. They didn't have a lot of endpoints. You know, it was just, and that's, and when you look at nine times, you could be like, yeah, I mean, relative to recent fiber multiples, that's pretty weak, right? Like, I mean, we've seen much higher multiples for fiber. But, like, I think Latin America and APAC are two of their weaker fiber holdings.

And I think EU and North America are really core. So I think APAC could be on the chopping block as well. I don't know what multiple they'll get, but given what we're underwriting, you don't need a whole lot. But let me throw this at you. What would John Malone do if he was interested in selling the rest of those consumer assets? So what's left? So let's talk about what's left. So they basically sold, I would say, their worst assets.

Now, if you read the Frontier presentation, you know, they have very specific IRAs and costs per pass home for rolling out rural fiber in certain markets. And so there's a disconnect between what Lumen has said and done and what Frontier is saying. I think it appears that frontier, maybe because they don't have a lot else, seems to believe that rolling out rural fiber has a high return. I have been told for years that Lumen did not see that math panning out. And so those especially those assets that were sold to Apollo, I think, fit that characteristic right or wrong. Maybe fiber's right, and fiber being frontier, maybe frontiers right, and there is a return there. And Apollo is going to do really well. And maybe Lumen's right or maybe it's somewhere in between.

But I think they believed that the ROI would not pan out on those assets. Okay. So they just sold those for five and a half times. All right. So what's left? So what's left is 16 states and they claim it's 70% urban and suburban. So only 30% rural, which the assets they sold are much more rural. You have really good markets in there.

You have Vegas, I believe. If you have Florida assets, you have Phoenix, Seattle. As my friend Eric Sparron said, these are football cities. And so, you know, these are good cities where they have dense fiber. If you looked at Denver where the level, sorry, where level three was based, like that, like that is a really nice asset all by itself. So my point being that these are attractive assets and there are, according to them, 15 million homes that they could pass, right?

And they haven't done a whole lot of fiber investing there. I mean, they have been, like, if you look at the only thing that's been growing in this business, it has been their broadband business. Now, it's not that big because they, you know, it's a good question. Like, why haven't they invested more aggressively in fiber? Obviously, they inherited a situation where they were not well positioned because the previous management team did not align the company that way. But yeah, I mean, they said for years to some degree that we have the capital, we just don't think the returns are there. And now they're pivoting. And so you can question that and you could say, that seems a little strange.

Like, why if you weren't capital constrained, why haven't you been investing more fiber? But to some extent, the costs have come down, right? You and I've gone back and forth about this. And I've learned a lot of, you know, recently about how much like the cost per homes pass have come down. And now with these two asset sales, they do have the money, I think, to simultaneously invest in the plant and pass these homes with fiber, pay the dividend. and generate a fair amount of free cash flow. So that's all good. But getting to my original point, they gave us almost no detail regarding, they gave us a very

broad perspective, 15 million homes, 70% urban and suburban, nothing about cost per homes past, where they were going to focus, the total amount they were going to spend. And so you can look at that a couple different ways. You could say they just closed two deals in three months. and everyone was just buried, right? And tired and, and who knows if they had, who knows if they'd even, you know, they didn't have, they didn't have anything to tell us, right? What they, what they just did is to sell two assets. And that's, haven't even closed them yet, right? They've announced them, but haven't closed them. So they're still probably going through

the, a little bit of pre-integration, you know, talking to regulators to get them to approve the deal. So not even closed. So, so not even close. So, yeah, maybe it's, maybe on the Q3 call or the Q4 recall, we're going to get a lot more data about what these assets are, the 16 states that they're retaining, like, you know, what does it look like to roll out the fiber? What kind of IRRs do they assume? Or, so there's that. So you could look at their lack of detail in a number of different ways. The other way to look at it is, you know, why would, why would I tell my competitors where I'm going to be investing? Just go do it, right? Like, as opposed to, you know, catering to the sell side and giving us way too much, giving us an information as investors to make us feel

comfortable, just go out and do it before, because there is a first, I mean, we'll agree, there's a first mover advantage in five, right? It's, if you're the, if you're the incumbent and you're the first one to pass a home, right? And you have that relationship, an overbuilder's going to have some, some, some ability to take that, but not necessarily a lot. But the other way to look at it is, if you thought you were going to sell those assets and they were on the block, you would talk them up all day, which is basically what they've done. They said, these are great assets. We've got, you know, 15 million homes to pass. The IRS here should be really solid. We now have the capital to do it. We're going to build fiber competitors, right?

And so, look, I don't know exactly what remains non-core, but I do think there are other assets that could be sold. And, you know, when we get into valuation, I think that the, the, the, the, the margin of safety here is that all you have to do is put the multiples they sold. They're two, probably two of their worst assets for, their worst consumer business and their worst business segment, which is Latin America, if you just put those multiples on the rest of the business, you have a multi-bagger from here. You don't need to assume anything other than that those multiples for their worst businesses, you know, are fair for the rest of the business as well.

So we're going to talk valuation in some of the parts of the second, but I just want to finish up on your thought there. So they sold the assets to Apollo. They sold the LADAM South America assets to, I think it was Stone Peak, but they sold those. And then you think that they're kind of prepping the remaining consumer assets, the remaining copper assets. They're prepping it for a sale. And that could be to another private equity player. Private equity has loved. I mean, Apollo just spent $7 billion on these, right? Private equity has loved buying copper assets, they can upgrade fiber, infrastructure loves it. They could sell it to a, you know, a strategic, who's buying rural telecoms as a strategic.

There aren't a lot of them out there, not because they don't want to, but probably because most of them, you know, their balance suits are a little stretch and the M&A history years poor, so most of them probably just don't have that appetite, but it's possible, it's possible. But if they sold the remaining consumer business, what would the rest of the company look like? What would the assets be there? you would have the business side, which, you know, pro forma, I mean, there's a lot of moving pieces here. So, like, these numbers may change, but, you know, you'd have about four and a half billion and be it died. I mean, who knows what it would look like, but something like four to

five billion dollars. We don't even need number, but it would just be the old level three enterprise. Plus, plus. So again? So Quest level three and basic, so. Legacy CenturyLink business, which includes a Quest assets, plus the remaining level three, which is APEC, EU, North America. So you would have basically, it would be mostly an enterprise fiber company. Which those go for, I mean, again, the devil is, the devil is very much in the details, but I'm thinking back to Zayo, which went for like 13 or 14 times EBITA. You know, Stone Peak, I can't mention that.

They bought a lot of fiber assets recently. for around 20 times EBITOS. So we're talking about a stock. The light path deal. White Path deal. Altis sold Light Path to Morgan Stanley infrastructure. I think that was 14 and a half times. And that was, it's a good market, but that's a very low growth asset, if I remember correctly.

So here we're talking about, hey, this is stock at five. Obviously, we just said they sold two big assets. We're talking about them selling the marine consumer and maybe Asia Pacific as well. But it's a stock at five. And we're saying if you get isolated down to that core, 15. So let's talk valuation. You know, I think one of the bull cases that I've heard here has been, hey, they just sold some assets. They sold the Latin American assets for 9x. They sold the Apollo assets for a little bit over 5x. The core business here is trading for about

5x EBDA. And, you know, the core, the remaining business is certainly a better business than what they just sold to Apollo. So it's too cheap. Walk me through the too cheap math. What is this kind of worth it in what are the parts there yeah i mean i think you just you just summed it up really well right like so you you have to to to believe um and this is like this is just math right to believe that the rem that the remain co is worth um i don't even know what you have to believe to get to the current stock price i mean you basically i mean let me just put it this way mass, the consumer side, as pro forma. So assuming the Apollo sale goes through, assuming the Stone Peak sale goes through,

if you value the mass side, which is, you know, whatever, somewhere close to $1.8,2 billion dollars in EBITDA, if you value that at zero and you put a nine, which is a stone peak value on the, on the business side, you get $18 on a $13 stock. If you simply put a nine on the rest of the business, so the rest of the business side, so the enterprise assets, and you put a five and a half, which is the same multiple they sold, the other, the clearly the weaker consumer assets for, if you just put it, so just a blend, so nine for the business side, five and a half for the consumer side, which is it called mass, that's assuming the proceeds come in, that's about $28, so on a $13.

stock. $28 on a $13 stock. So that's it. Well, you know, I'm over here buying all T's and saying it's a $50 stock when it's 20 and it's going down 10% every day. But I like that method that they can, let me ask, I've got a couple of questions here. First, there's been a lot of questions on the dividend. I think one of the things that has attracted a lot of investors to the story, at least initially, is the dividend. I think it's a dollar per year, $13 stock, you know, 8% yield. It has certainly yielded over 10% in the not too recent past. But when I look at that GS comp, A, I think that dividend, a yield that high for a company that has said they want to do fiber to the home investments. They want to buyback shares because

they think their stock too cheap. I think that dividend's probably inefficient. And I think they've pretty clearly signaled they're going to cut it. But I guess there's two questions there. What do you think about the dividend? And, you know, I always worry when you see a dividend cut, even if it's been telegraphed, people are just going to freak out and panic. So how are you guys thinking about the dividend and where it goes from here? Yeah, I mean, the question you have to ask yourself is, are you, what's your, what's your timeframe? If you are living month to month, week to week, year to year, and stock being down 10% because of a dividend cut would be really painful for you, then you want

them to keep the dividend. If you have a three to five year time horizon and have a corporate finance framework that is suggestive of being agnostic between a buyback and a dividend and whatever, paying down debt, or maybe you do have some opinion on that. But if like the short-term pain of a dividend cut is irrelevant to you for the long-term value of this company, then they should absolutely cut it. I don't know if it's to zero. I don't know if it's 50%. I don't know what it is, but they should absolutely cut it and they should buy the crap out of their stock if you think it's worth $28. Or they should pay down debt if they're so worried, if people are really worried about a three to three and a half times levered, you know, telco asset that has some declining aspects of it, then pay down debt and get underneath it. Or whatever, accelerate the 15 million homes that you can build five or two and then get the consumer side growing again.

And then maybe the whole thing re-rates. So my point is there are probably better uses for that cash than paying a dividend. There are a lot of people who would be really upset if the dividend got cut. I mean, if anyone's buying it for an 8% yield today, I think that's a wrong way to look at it. You should be looking at it. It was like, what is this intrinsic value of this asset at this very moment? And if we're anywhere near right about the intrinsic value, that would suggest that there are other uses, including a buyback. But of course, the buyback then, you know, it shrinks the share count,

but then the, then you're using your cash as opposed to delevering, you know, you're using your cash for that. And does that raise the leverage? Does it keep it leverage neutral? So what does that mean? So I think there's a tough balancing act here because you've got people who truly care about the dividend. You've got people like, you know, who are, who have the same sense of the SFTP that we do that think, wow, you should be buying a lot of stock. And then there are a lot people also, and there are plenty of your compatriots on Twitter who think that they should be investing aggressively in fiber, right? And then there are people who are worried about the debt. Those are four uses of cash flow, which are like, you can't do them all.

Not emetrically opposed, yeah. Yeah. And so, so look, Jeff, Jeff and his team have a tough, there's a tight rope here. And it's not, and look, why did the stock go down? Like, just, just like, irrespective of what we think, that Apollo deal was at a multiple higher than the stock price, right? So you sold your worst assets for a multiple higher than the stock price and the stock went down. So what were people freaked out about? One, you mentioned the word dividend cut in people.

And there's a lot of short-term investors who are whatever, just want to front run a dividend cut and stock goes down. The other thing is, as we talked about, they give us almost no detail on what the fiber investment is going to look like. But, you know, and our feedback to the company is just like, if you weren't going to tell us anything, tell us that, you know what, you'll tell us on Q3 and as opposed to going back and forth with a thing about with a self-side analysis and just saying nothing, right? And so say you're going to have an investor day in detail at all when you, when you close the

murders, you know, that's the pretty typical thing to do. And I know Lumen just had an investor day in, I think it was April or something, but just say, hey, we can't detail it now. We've been at work on $16 billion of asset sales. but we've got a good idea and we'll give you guys a lot more clarity once these deals close. Yeah, that's, I mean, so that's why people freaked out. There are, look, I'm going to go back to Ben Graham. And I think one of the most important things Ben Graham ever said is that in the short run,

the market is a voting machine. And in the long run, it's a weighing machine. And the short run voting machine said, yes, these deals make sense in a lot of ways. but you, but I don't like the, I don't like the lack of transparency and I don't like the idea of a dividend and cut and the stock went down. And so I don't,

getting to really just drive it home. I don't care about the dividend. Yes, would it suck if my largest position was down 15% in a day because I cut the dividend? Yeah, that would, that would not be a fun, fun day for us. But I think if there are better uses of the capital, if you have a three to five your time horizon here, you would rather them use it elsewhere.

Yeah. Look, I 100% agree with you. It's just one of those things, you know, the me of three years ago would have said, just buy in front of the dividend cut. Screw it. Like, the value's there. And I agree, it's a better use of the money to buyback shares or go invest in fiber. But the me of today says, oh, you know what?

Like, it's the old thing. Everyone knows earnings are going to miss. And then they miss and the stock's down 20% because it turns out not everyone did. And everyone knows the dividend is going to get cut. and they cut it and it's down 20% because there's a lot of funds that are for the dividend and they sell. So I agree it's inefficient, but it's a worry. And, you know, in many ways, have you ever looked at curate? Oh, curate. Yeah, no. I mean, we're Liberty guys. So I've owned, you know, off and on, own curate for probably since, you know, when it was QVC, when it was a tracking

stock. I mean, off and on since probably 2015. I used to follow it very closely. I kind of stopped And I kick myself because last year they announced a, you know, anybody who's followed this, the company used to say, we're going to buy back shares like crazy. And then they ran into some headwinds. The business underperformed. And all of a sudden, you know, they had loved retiring shares when the stock was 25 and the stock dipped to 10 and they stopped. And the heels of COVID, they actually were a big COVID beneficiary. And they made a lot of money.

And they decided to do this weird recap. They sent out a preferred share and they paid a huge dividend, which Malone does not pay dividends. That's very tax and efficient. And I know a lot of people said, this is a special situation, get it for the return of cash. And I looked at it. I said, I've never seen this before. It feels to me like Malone and the insiders are saying, get it, get all the cash out while the getting's good. Well, the stock's done incredibly well since then. So clearly I was wrong. But I mean, but I think that was to your point. Like that was a rebound. Everything was down. Everything's up. That's true. Yeah. So look, the stock was like, what, five or six bucks at the bottom. And now it's what, 10 or 11. It's back. but where it was, you know, before COVID. It's 10 or 11, but they've also paid out like $6 or $7 of dividends. So you have all your costs basis back.

No, that's been a good one then. Let me ask you a hard-hitting question. And please, this is tough. So if I'm too far off. But I noticed when I was flipping through their 10K, so the U.S. government to support rural internet provides lots of subsidies. One of them they provide is Connect America Fund that started in 2015. It ends at the end of this year.

I believe, CenturyLink, Lumen makes $500 million per year from it, which I think is pretty much a hundred percent margin. Now, some of that is related to the Apollo assets they're selling, but still, that's a lot of money that CAFA is gone. It's going to be RDOF, which is rural digital fund, which I think incentivizes people to build out to rural. But, you know, that's $500 million of CAF money that I think it's almost 100% margin. It's going away.

Yes, some of that's going to Apollo, but when I look at that, I say, oh, that's a really high margin cash flow stream that it's gone. So how are you looking at that adjusting your models for that, all that type of stuff? Yeah, I mean, we're assuming that 500 million is gone, right? And now, we don't know what percent is going to Apollo and what's what percent of that. My guess is, given the rural nature of, you know, the assets they're selling to Apollo, my guess is a lot of it's going there. When we say, when we say they're selling assets to Apollo at five times, I'm doing this for memory. That was trailing EBTA. So that would include the CAF number. So if I added that CAF number back on a kind of run rate forward basis, we're talking maybe

seven times EBDA. Am I imagining that or am I thinking about that? Yeah. I mean, I'm not going to comment on the exact number because we don't know, but absolutely your your sense is absolutely right. Because if you look at and let's be fair, you said you're going to ask a hard-quitting question. Lumen did not do particularly well in our DOF. Now, I would say, I'm a little unclear, and I think a lot of people are a little confused about what's going on with that. Like, they haven't really been sending out proceeds, you know, to, because, I mean, the auction, that thing happened last year. And there hasn't been a lot of movement there. We had a change in administration.

There were a lot, a lot of complaints about the way that was handled. You know, for example, the amount that SpaceX was able to get, right, without even, they didn't. at that point, they didn't have a system and they were able to get, I mean, now they actually have something, but then they didn't have it. You know, another one of our holdings via stat has been very critical of that process. And, you know, I think Lumen looked at it. And if you look at, like, the way it worked, like, there were people bidding. It was this weird auction where you'd actually feed how much you'd be willing to invest

in a specific market as opposed, like, like, proceeds from the way I look, from the way I understand it. And so there's been a lot of complaints about the way that process is. And something, it feels like the change in administration has slowed that down. So who knows? There was always going to be an RDOF 2. This was one. There was always going to be a 2.

Who knows if they scrapped the entire thing. But in any case, you are 100% right that we, you know, that that isn't level 3 money. So let's just be clear here. This is not enterprise. This was the consumer side that is basically going to be less profitable going forward. But that's, as you said, captured in the Apollo numbers. And so let's just, just rough, let's just say that $250 or $300 million of that is going to be tied to those Apollo assets. And absolutely, that multiple is even higher, right?

And so, I mean, and that's kind of what, if you look at Cincinnati Bell, which Cincinnati Bell went, which was a more fiberized asset than what the Lumen assets are, that went for seven and a half times in a bidding war. So there is a private equity demand for these assets. And listen, I should say something because I'm a value investor and I always talk against my own book and I always have to look at the other side. It's like my main worry is that this is the definition of, you know, whatever, a greater full stock where, you know, you're just owning it, hoping that someone will pay a higher price for it, even if the fundamentals aren't there. And so, you know, we've seen these high multiples that are, that, you know, whatever, Cincinnati Bell went for a much higher multiple than Lumen trades at. And I would argue that at least the level three side of Lumen is far better than a lot of what Central Cincinnati Bell had. But look, this could be an outcome of the fact that we have a 10-year that's at 1.5%. And a 10-year goes to

three and a half percent, then infrastructure or fiber multiples aren't going to be what they were. And so it does scare me a little bit. And look, I think a lot of this is reflected in a $13 stock price, but it does scare me a little bit that, you know, Lumen may have a moment in time. And as an investor, you know, I don't know if it's, I don't know if you consistently can make money hoping to sell something at an, you know, whatever, and an inflated multiple at us at a moment in time.

So that's, you know, that's something I worry about. But then on the flip side, you know, put a nine, is a nine an okay number? That seems like a, you know, very few, very few infrastructure-ish assets trade at that. So, but, and you put a five and a half on the, on the other business, and you're getting $28, right? Or if you put a zero on it, you're getting 18. There's a margin of safety. And so what I tell people when they ask me about, Lumen, and I say, absolutely, all of these things you're saying are true, they've got problems with the copper plant that are declining they've got businesses within level

three that are not growing and that are shrinking you've got a bunch of wholesale revenue that's going away you've got um you've got legacy phone business even within the enterprise that's that's going down so absolutely all of those things are true talk to me at 18 dollars and i may have a very different perception than at 13 right or at 12 or at 8 when we talked about it last year on on the investors podcast so it's like you know it's it's about margin of safety. And so, but, but to frame it, right, like, I'm a Buffett style investor. And you're like, what in the world is this guy doing with this? Like, investing in Lumen, it's because it's a special situation. And like, I think that people don't view it as such. People think that this company

will be in some form in the same way that it looks, you know, it looks now in three to five years. I don't think that's the case. And so, but yeah, the time frame matters. And they've got to hit, they've got to hit the bid as far as I'm concerned. Let me agree with you. on one point and then push back on one point. A, I agree. I think investors are very much underrating, and it's one of the reasons I've been looking at everything telecom. They're underrating how much infrastructure money wants to pour in here.

You know, I can list, Cincinnati Bell was a massive bidding war. People forget, I mean, it was one of the best bidding wars I've ever seen. I wish I had been involved in the stock because I'd actually done a lot of work on it before. But, you know, if I remember correctly, it was Apollo bid, Brookfield came over the top. I mean, it was like a 60% initial bid, and then there was a bidding war that drove that 60% premium up another 60%. So by the time it was all over, the stock had almost tripled or something. But it wasn't just them. O'Telco went for a huge multiple.

There have been several other Alaska communications up in Alaska. I actually did play that one. I put a write up. People can Google it if they want. That went for it. Like there is a lot of money here that is paying. You can go look at the multiples they're paying. And if you get with Lumen and with any of these guys, if you get the multiple,

that just the multiple people are paying, it's a big problem. Let me give a pushback, though. Yeah. And I want to talk interest rates in a second, too, but let me give a push at. You know, I've done some work on Lumen. Before you and I even did the podcast, I read the investor day. I flipped through it. I followed it for a while.

You mentioned Frontier earlier. The ticker there is FYBR. That's kind of the one that I've done a lot more work on, and I very much like it for all the reasons we've discussed here. So my pushback on your Lumen thesis, I think, would be, hey, I agree with you. People want to buy, especially the consumer fiber and actually the enterprise. price fiber because we talked ZAO, we talked Light Path melodies. But Lumin is just this mismatch

of assets. So I don't disagree with you. The value might be there, but it's so complicated and so hairy. Like Frontier just emerged from bankruptcy. Very clean story. Trades for five times EBITDA. They're going to go do the fiber investment. They've laid out. They've been pretty clear. They've got wave three assets. They've got 15 million homes fast of them about five million. They're pretty clear. They'll look to sell into an Apollo like deal if they get the thing there. So it's just a much cleaner story. Why is Lumen the way to play? because there's other, it's not just fiber, there's consolidated, a couple other. Why play looming with all that hair where you can get kind of the same upside and the same

story and a much cleaner story? Yeah, I mean, I think it's a good point. I think in theory, you could make money on both. And I'm not saying any money. I'm fingers crossed that we're both going to make money on it. You and I will be high-fiving in 12 months or 24 months. I totally agree with that statement. I just, I think internally, so you have to understand, when you're an owner of an asset or an owner of stock,

you have to understand which parts of the business or which of the whole company that you'd be a buyer of and which parts you'd be a seller of. I think we would be a buyer of 450,000 route miles of fiber in the business side. And something that I feel like we could, you know, if you could buy the whole business, something that you could buy the whole business, something that you could. hold as a core infrastructure asset. Yes, for sure, Google and Facebook are building their own fiber, subsea fiber across the Atlantic and the Pacific. But that's because bandwidth is growing at 30% per year, right? Like, at some point, we will run out of infrastructure and people will have to build more fiber. That was not true in 2000, right? Like, why did Global Crossing basically go bust? It's because of that. There was an overbuild.

because they laid so much and there was no demand, right? So it was growing 30%, but it was starting off such a small base, and they laid it like it was going to grow 500% or something. But now we're in the opposite position. I just interviewed for our podcast, the CEO of a global satellite broadband company. And if you've listened to this podcast or follow Cochre, you can guess who that was, but his point was that, you know, they're seeing fiber demand growing 30% year over year, right? Because video is so such a bandwidth hog right and so for that those assets right what i think of is infrastructure it was going to be infrastructure and by the way i'll throw this out there and then maybe totally totally speculative but i don't see why the next infrastructure like asset for

someone like american tower or those guys their own i don't understand why like like fiber in the ground is not like a very obvious kind of like infrastructure asset to all own in addition to that so is that like is that crown castle or is it you know is it amt i don't know that's just i just see this as an infrastructure asset that is going to be core to our lives and that's been i think highlighted by the covid environment so those assets i would like to own i don't know that i want to own consumer rural consumer assets like i i look at i've read the same presentations that you have i've i've i've just been scratching my head a lot about the economic surrounding rural fiber builds. Now, I will say that we haven't even talked about the infrastructure

built, which could make, I mean, look, Frontier and Apollo as they take these Lumin assets, might just get a windfall that whatever you think the return is going to be, like you're going to get, it's going to be even better because you're going to get government money. So maybe that makes sense. But the simple answer for me is twofold. One, I like the business assets. And if that's all we owned, when, And the consumer assets were sold or whatever next strategic movement makes, I'd be okay with that. And so and if I could add part two, I think you really, you know the management here well

and I think you really like the management team. If I can put words into your mouth. No, that's, no, the people part's the same. And I will throw one other thing out there just because, you know, no podcast on a security is not, you know, is complete without a bunch of wild speculations. But this is something that we've actually talked to the company. about and that's the idea of turning into a fiber reet. And so that did not make any sense when you had NOLs because there's no there's no reason. You can never use, you can't use the NOLs if you're

a REAP. However, if you look at these two transactions that just occurred, they will use a lot of those NOLs. All of the NOLs will be gone. And so they will be a cash tax payer to a large degree, call it whatever, maybe 2023 or back half of 2022. That's going to depress free cash flow. So the question is, what do you do with that? It is something that the company has looked at. One of the issues is that the fiber reed, like, it's not really an asset class yet, right? There is that one, I forget the one, what is called, but it's tied to the windstream assets. Unity.

But isn't it windstream like 40% of their business or something like that? Well, so when they spun, I've got a lot of history with them, Windstream was 98% of their business when they spun. And I think it's still pretty high. they never got the multiple they wanted. There were some lawsuits there, too. As I'm remembering it, that's a really complicated story. I don't think that's a fair comp. But if I'm an investment banker and I'm walking in and be like,

you should turn into a fiber rate and I look at unity and I'm like, that thing doesn't look. But they've got customer concentration issues that Lumen would not have, whatever the level three, whatever you want to call it, level three plus Quest, whatever their main code, they wouldn't have that. And so, you know, that that re-operative. is something they have in their bought back pocket at some point. And as you know, like Reets live in a different world because of that. If I'm remembering correctly, Zayo, the white whale for them was

always switching from a C-Corp to a reet, if I'm remembering correctly. And I think the attractiveness of that came and went and there was some, there were some operational issues there. But I guess for Lumen, the reason you like Lumen is you really like, you like the people, you like the valuation. But I think a core part of your thesis is we really like these enterprise fiber assets. And you know, the consumer assets, we can kind of take or leave. Hopefully we get a nice multiple. We're buying them very cheaply. But you like those enterprise assets, which I can certainly understand. They're not growing. So there's there's some wood to chop there to prove that these assets are something that you, as any, as a shareholder, as a buyer of the whole

asset, that's something that you want to own. Because, and I think this. is the biggest, my biggest criticism and concern about the stock is not that the copper business is declining. Clearly that's going to happen. It's going to continue to happen. It's that they can't get the top line. For whatever reason, all of the reasons we've discussed about declining businesses within the level three, COVID sure hasn't helped anything as SMB has gotten really hurt by COVID. But, you know, the strength of the enterprise fiber assets is only as good as your ability to get them to actually grow. And that has been the challenge.

And if you just, they have done a ton to invest there. And, you know, I think for anyone who wants to not just be completely backward looking and try to understand what a path to growth would be for those enterprise assets, look at what they've done with investing in the edge, you know, 97% of the country is now within five milliseconds of latency within the Lumency. plant. So, like, that, that, that opens up all kinds of opportunities for IoT, you know, for, you know, like, whatever, cloud operations, like, like operating companies operating whole in the cloud versus, you know, kind of like a hybrid model. So there's just, they have a lot

of different balls up in the air to get the enterprise growing, but 100% it ain't happening right now. We, we've talked about a lot. You've been super generous with your time. We, you and I talked for almost 20 minutes before the podcast started and we're running over an hour and out. But is there anything else on Lumen? Again, this is a complicated story. There's a lot of different parts. So we could have talked about a lot of other things.

I've got so many notes over here, I want to say. But is there anything you wish we had hit that we kind of haven't covered so far? Yeah, I think as an investor, it's important not to get so in the weeds that you lose a sense. of what the high level is. And so at Coastreet, we really focus everything and on four key variables. And, you know, you and I could have this conversation for three hours because there are so many moving pieces.

But really, there's only a couple of things that really matter here, I think. And the first one is the question of what is this going to look like? What is the structure of the company? what assets will remain in, you know, call it 24 months from that, right? So I think so that call, I put that under the heading of capital allocation. And so does Jeff Story a, is he incentivized, does he care, does he know how to take a $13 stock much higher? Does he, is it in the DNA of him and the management team and this company to figure out how to create value from here? Because if you read

anything he says, he says over and over again that we think our stock is material undervalued. So can they, can they create that value, right? And I think that's the key variable. And so to understand that, you have to try to understand the people. And we've done a fair amount of work talking to former employees and people who were like, you know, friendly with the former board members of level three and who really have an insight and how this, how, how, you know, the origin of, of, or, or, you know, what Jeff was thinking when he came to the company and now kind of like four years in, what might he be thinking. So, you know, I don't, I don't want to reiterate all we talked about, but I really just, if you, if you can distill it down to those four key variables, which are capital allocation, I think ability to maintain a balance sheet that, that, that, that, that is not over levered, you know, I think getting some growth at enterprise, those three,

I think, are really what's going to drive the stock from here. And so as opposed to, you know, spending your time nitpicking, you know, little things that they've done, which we certainly do. But instead of, instead of, like, worrying about how Jeff Story sounded on the, on the conference call or the way, the way they feel the questions poorly or their comments about the dividend, take a step back, look at the, look at the big picture and, you know, make a call whether you think these people are value creators. And we have publicly, this is the second or third time, we were publicly saying, we think Jeff Story is a value creator. We think he gets it. And, you know, The moment may be fleeting, which is why, you know, we think they should hit the bit, right, in some capacity, at least to get down to a core that may, that just maybe other people might appreciate relative to that problem, which I said is like, if you combine pretty good assets with really crappy assets, the really crappy assets are what carry the multiple. And people tend to focus on the really crappy assets more than the good assets.

Last question. And then we'll kind of wrap this up. When's Jeff coming on the compound? podcast. I feel like you'd be a perfect guess and it would be great for the company. Yeah. Yeah. So, um, we're trying for sure. Um, we are, you know, we're still building our credibility. We, we're just about to launch, uh, sorry, next week we will be, uh, releasing our eighth episode. Um, we've done 12. Um, got some more momentum, which is great, uh, to, like, bigger, more well-known companies. I think it's like, I like a balance of like Stone X. No one knows who Stone X says, Sean O'Connor was amazing on that podcast. But also, it's good to have some Fortune 500 CEOs on there as well. Just get your casual Warren Buffett. Just get your

as just to get the numbers. We're not there yet. We're not there yet. But I do, you know, I'm a mid-cap investor. So to me, if I'm getting six and seven billion dollar companies on, that's, that's, that's, that just shows that the, that the, the podcast is resonating. You know, obviously, um, this is a complicated thing. And, Lumen has been in a position where they're, look, the Apollo deal is not going to, supposed to close for another year. So they've got Harts got Redino stuff they're dealing with. They've got regulators to deal with. It's a question of how much Jeff could even say. And so we would love to have him on. I am, you know, I have tried to subtly prod southeastern to, you know, to figure out if we could like find a way to make that happen. But it's, it'd be great. But, um, you guys will be the first to know if we can do it. Well, hey, look, I'm going to tell everybody again, Compounders podcast, Ben's podcast, I'll include a link in the show notes.

You really should go check it out. I've really enjoyed it. I've enjoyed it so much. I hit Ben up every now and then. I'm like, I'm looking at an interesting company. I need you to get the CEO on and talk to them. But go look at it. If there's a company you like, go check it out because I promise you that you're going to

learn a lot from the podcast. So Ben, second appearance. Really appreciate you coming on. Looking forward to the third appearance. Looking forward to hearing your voice on the podcast again. at a minimum. But thank you for coming on. I've enjoyed this and we'll chat soon. Yeah. Thanks. And I hope, you know, I hope this has been helpful for people who are interested in Lumen from giving some like a broad perspective and kind of like a high level

thought. And I am sure there will be plenty of duration based on it because that's just based on my early Twitter mentions at a minimum faux Greg Maffa is going to be coming at us. But I enjoyed it. I'm willing to take it. I'm willing to take it. Thanks. Thanks a lot, Andrew. Thanks a lot, Ben.