Tony Davis - Vice President of Investor Relations Glen Post - President, Chief Executive Officer, Director Stewart Ewing - Chief Financial Officer, Executive Vice President James Ousley - President of Enterprise Markets Group, Chief Executive Officer of Savvis Operations Karen Puckett - Chief Operating Officer, Executive Vice President

Michael McCormack - Nomura Batya Levi - UBS Simon Flannery - Morgan Stanley Frank Louthan - Raymond James Phil Cusick - JPMorgan Tim Horan - Oppenheimer Scott Goldman - Goldman Sachs David Barden - Bank of America Nicole Black - Wells Fargo Donna Jaegers - D.A. Davidson Tom Seitz - Jefferies

Good day, ladies and gentlemen, and welcome to CenturyLink's fourth quarter 2012 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time. (Operator Instructions) As a reminder, this conference call is being recorded. I would now like to turn the call over to Mr. Tony Davis, Vice President of Investor Relations. Mr. Davis, you may begin.

Thank you, Saeed. Good afternoon, everyone, and welcome to our call today to discuss CenturyLink's fourth quarter and full year 2012 results and our capital allocation changes released earlier this afternoon. The slide presentation we will be reviewing during the prepared remarks portion of today's call is available in the Investor Relations section of our corporate website at ir.centurylink.com. At the conclusion of our prepared remarks today, we will open the call for Q&A. As you move to slide two, you will find our Safe Harbor language. We will be making certain forward-looking statements today, particularly as they pertain to guidance for first quarter and full year 2013, the integration of Qwest and Savvis, our capital allocation changes and other outlooks in our business. We ask that you review our disclosure found on this slide as well as in our press releases and in our SEC filings, which describe factors that could cause our actual results to differ materially from those projected by us and our forward-looking statements. We ask that you also note that our earnings release issued earlier this afternoon and the slide presentation and remarks made during this call contain certain non-GAAP financial measures. Reconciliations between the non-GAAP financial measures and the GAAP financial measures are available in our earnings release and on our website at www.centurylink.com. Now turning to slide three, your host on today's call is Glen Post, Chief Executive Officer and President of CenturyLink. Joining Glen will be Stewart Ewing, CenturyLink's Chief Financial Officer; and also available during the question-and-answer period of today's call will be Karen Puckett, CenturyLink's Chief Operating Officer; Bill Cheek, President of Wholesale Operations, and Jim Ousley, Chief Executive Officer of Savvis. Our call today will be available for telephone replay through February 20, 2013, and accessible by webcast through March 6, 2013. Anyone listening to a taped or webcast replay or reading a written transcript of this call, should note that all information presented is current only as of February 13, 2013 and should be considered valid only as of this date regardless of the date heard or viewed. As we move to slide four, I will now turn the call over to your host today, Glen Post. Glen?

Thank you, Tony. Good afternoon, everyone and thank you for joining us today to discuss CenturyLink's fourth quarter and full year 2012 results. We will also provide guidance for the first quarter and full year 2013 as well as other important updates about our business. We are pleased with our fourth quarter and full-year results and we continue to make good progress on a number of fronts. Starting on slide five, I would like to highlight the progress CenturyLink made in 2012 towards achieving the goals we set a year ago. Our top line pro forma revenue trend continued to improve in 2012 with an annual revenue decline of 1.7%, compared to 3.8% decline in pro forma 2011 and an estimated 5.6% decline in pro forma 2010. This continued improvement is driven by strength in our strategic products, including high-speed internet, Prism TV, high-bandwidth, our data services to enterprise customers and wholesale customers, and our hosting services. For full year 2013, we believe we will reduce our annual revenue rate of decline to the 0.5% to 1.5% range and we expect to reach revenues stability in 2014. While we continue to face declines in legacy services, we believe we have the right asset mix in place to stabilize our top line and grow revenues over time. Continuing onto slide six. During the year we achieved strong improvement in access line loss and continued the subscriber growth in broadband and Prism TV services. We added over 196,000 broadband subscribers and nearly 45,000 Prism TV subscribers during the year. In Enterprise Markets network segment during 2012, we grew recurring revenue for four consecutive quarter, driven by strength in high-bandwidth data services revenue. In addition, we made continued progress on the Fiber-to-the-tower initiative completing over 4,500 fiber builds during 2012, ending the year with approximately 14,700 within our territory. During 2012, we continued to expand the global reach of our colocation and managed services, adding three new data centers, expanding available space in four existing data centers. Also in December, we launched savvisdirect, our simplified approach to cloud computing for both, small and large businesses. During 2012, we increased our operating expense synergy target related to Qwest acquisition from $575 million to $650 million, and we are pleased with our synergy achievement throughout last year as we ended 2012 with an annual synergy run rate of $480 million. Moving now to slide seven. I will provide a few highlights from the fourth quarter of 2012 regarding our key strategic initiatives. As we have outlined over the past several quarters, we are focused on continued strategic investment in broadband services expansion and enhancement of Prism TV, Fiber-to-the-tower and our hosting and cloud computing services. Our fourth quarter results reflect the continued progress we are making in these key initiatives. Starting with broadband expansion enhancement, we continued to make significant investments in this area and during the fourth quarter we added over 41,000 high-speed internet subscribers. With these new subscribers we now have more than 5.85 million broadband customers. Our customer retention efforts and the growth benefits of bundling broadband with other products and services contributed to the improvement in the decline of the rate of access line loss which improved from 6.6% in the fourth quarter 2011 to 5.7% in fourth quarter 2012. We also expanded our Fiber-to-the-node infrastructure to more than 274,000 new living units during the quarter, adding nearly one million living units in 2012. We now passed over 7.1 million living units with Fiber-to-the-node technology As a result of our network investment enhancements, broadband speed availability has continued to improve. Over 70% of our enabled access lines receive 6 megabits or higher. Nearly 60% of enabled lines receive 10 megabits or higher and 31% have speeds of 20 megabits or higher. We have been very focused on expanding our Ethernet and MPLS services for our business customers. During the quarter, we continued to expand our Ethernet over Copper footprint which has increased over 80% in 2012 to over 700 Ethernet enabled central offices. We expect to continue making investments in our network, enhance speed capabilities in order to continue delivering competitive broadband products and services across our markets. Turning to slide eight. Our Prism TV service continues to perform well and represents a very compelling entertainment alternative to cable TV service in the markets where it is currently available. We added over 10,000 Prism TV subscribers during the fourth quarter ending the year with 115,000 subscribers. Of the 45,000 new subscribers, we have added over the past 12 months, over 50% were new subscribers or new customers to CenturyLink. We now have a penetration rate of nearly 11% across eight markets in which the service is available during 2012. In addition we continued to enhance our IPTV features by introducing new functionality and applications, including expansion of our TV Everywhere capabilities, our video-on-demand library and successful trial of wireless set-top boxes. Prism TV continues to have a positive impact on churn and line loss trends. We experienced greater than 90% broadband pull through rate with our Prism TV sales to new customers. We continued to expand our Prism TV enabled footprint and expect to have additional subscriber growth in the months ahead. As announced last quarter, Phoenix will be the first legacy Qwest market to receive Prism TV service. The soft launch occurred in late December and the early results and impressions are favorable. We are optimistic about success in this market. The Phoenix market will be commercially launched in the first half of 2013 and we also expect to enter a second legacy Qwest market in mid-2013. Continuing on to slide nine. A third key strategic initiative for us is investing in fiber builds to as many towers in our service area as is economically feasible. During the fourth quarter, we completed approximately 1,175 Fiber-to-the-tower builds for a total of over 4,500 during 2012. Current, we have over 14,700 fiber builds completed across our footprint and we anticipate completing an additional 4,000 to 5,000 builds in 2013. This initiative supports anticipated long-term growth in data transport, much of which is driven by wireless data traffic. It also expands our addressable customer footprint by enabling fiber access points to other strategic locations where it's viable along these routes. We believe our Fiber-to-the-tower program have solidified our wholesale access revenue for the long term and assist in the stabilization of our revenue trends. As we have discussed with you before we are experiencing some revenue compression as our wireless wholesale customers transition from copper based DS1 facilities to Fiber-based Ethernet services. However, we do anticipate that wireless bandwidth growth will result in expansion of Ethernet consumption reversing the current revenue compression by early 2014. On average, bandwidth capacity of initial fiber-based connections is increasing. Moving onto slide 10. We continue to invest in managed hosting and cloud services to increase datacenter capacity as well as expand our product portfolio to meet customer needs and expand our market opportunity. We are seeing benefits from our investments in this area and realize the highest quarterly bookings in four years in the fourth quarter rebounded from the third quarter. We continued to expand our facilities and opened a data center, Frankfurt, Germany in the fourth quarter. With this facility, we ended the quarter with 54 data centers in North America, Europe and Asia, with total sellable floor space of about 1.4 million square feet as we continue to expand the global reach of our Managed Hosting Services. We anticipate increasing hosting and cloud revenue expansion opportunities in 2013 as we further train and enable our sales channels for business and wholesale customers. In October, we announced the beta launch of savvisdirect, our simplified approach to cloud computing with small and large businesses, the commercial launch occurred launch in December and early indications are promising. And finally, on October 15th, we closed acquisition of certain assets of Ciber's global IT outsourcing business. In addition these outfit assets will complement savvis' existing ITO assets by expanding our capabilities for application management services and helpdesk support. Now turning to slide 11, I want to address our announcement today regarding changes to our capital allocation strategy. We have decided to repurchase up to an aggregate $2 billion of our outstanding common stock for the next two-year period ending February 13, 2015, and we've decided to reduce our quarterly dividend to $0.54 a share from $0.725 per share. Just little history here is backdrop. As we were finalizing our budget for 2013 and working with the rating agencies, it became apparent that in order to maintain investment grade ratings, we need to reduce investment. We need to reduce investments in the business and our growth that is investments and really on our growth initiatives, and/or we need to reduce dividend significantly and use 100% of free cash flow to repay debt. Again, if we want to maintain our investment grade rating, we decided that it is in the long-term best interest for the company and our investors to significantly reduce the dividend and use the proceed to payback debt to maintain investment grade rating. We believe it is important to continue to invest capital in our growth initiatives that will help bring us to revenue and EBITDA growth and returning cash to shareholders as well. Also we determined if we were willing to accept the loss of investment grade rating we could return more cash to shareholder during 2013, 2014, and we were even with reducing the current dividend and while in implementing our share our repurchase program. We decided to take advantage of the opportunity to get more cash to shareholders now and adjust the dividend to a level that will be closer to the payout ratio that we have historically maintained actually we've utilized all our NOLs. So, we expect to be a full cash taxpayer in 2015. And as with this plan, we will be able to continue to investment in our business and our growth initiatives at a strong level. We've worked to make our decisions based on our ability to drive long-term shareholder value and we believe these decisions, these changes will do just that. On the slide 12, in summary before handling the call to Stewart let me say I am pleased with our fourth quarter and full year 2012 results. We continue to improve our top line revenue trend and reach the target level of rate declines we set early last year. We reduced our access line losses by 9% compared to fourth quarter 2011 and we achieved good high speed internet subscriber growth as well as a solid increase in the number of Prism TV customers. Also the focused investments we made in our key strategic initiatives have positively contributed to strategic revenue growth and continue to improve our top line, our revenue trend. We believe the soft launch of Prism TV into the Phoenix market in the December and the subsequent commercial launch in the first half of this year will position us well to grow video subscribers during 2013 and beyond. We are also optimistic about leveraging the acquisition of Savvis to generate organic growth, our new savvisdirect product offers the opportunity to gain market share in the fast-growing cloud space across our entire range of customers. Finally, we believe the capital allocation initiatives announced today will further our strategy investing key drivers to stabilize and grow top line revenues. In addition to the share repurchase program our very competitive cash dividend we will be able to significantly increase the total cash returned to shareholders in the next two years. With that I will turn the call over to Stewart for an in-depth look at our financial results. Stewart?

Thank you, Glen. I will spend the next few minutes for reviewing the financial highlights from the fourth quarter and then conclude my remarks with an overview of the first quarter and full year 2013 guidance we included in our earnings release issued earlier this afternoon. Turning to slide 14, I will be reviewing the results excluding special items as outlined in the earnings release and associated financial schedules. With that let's turn to our results for the fourth quarter. As you can see we generated solid operating revenues and cash flows. Operating revenues were $4.58 billion on a consolidated basis, which was in line with our guidance for the quarter and represent a 1.5% decline from fourth quarter 2011 operating revenues. This also represents a solid improvement from the 3.2% annual decline in the year ago. Strategic revenue in the quarter increased to 46% of total revenue from 44% in the fourth quarter year ago due to growth in strategic products such as high-speed internet, high-bandwidth data services, Prism TV and Managed Hosting Services, adjusted diluted earnings per share for fourth quarter was $0.67, meeting our guidance. As we've discussed on prior earnings calls, adjusted diluted EPS excludes special items and certain non-cash purchase accounting adjustments. Total cash operating expenses decreased from fourth quarter 2011 to fourth quarter 2012. This decline was primarily the result of lower personnel related costs being partially offset by higher data hosting and network costs. We generated solid operating cash flow of approximately $1.91 billion for the fourth quarter and achieved an operating cash flow margin of 41.7%. Additionally, we generated $610 million of free cash flow during the quarter, which is defined as operating cash flow less cash paid for taxes, interest and capital expenditures and additional adjustments to other income. Our strong cash flows continue to provide us the financial strength to meet our business objectives and drive long-term shareholder value. Turning to slide 15; year-over-year revenue declined 1.5% from fourth quarter 2011. The decline was primarily a result of the growth in strategic revenue and other revenues being offset by lower legacy revenues due to access line losses and lower minutes of use. Strategic revenue growth was driven by strength in high-speed internet, high bandwidth data services and hosting services. Now turning to slide 16; I will discuss each of our operating segments beginning with our regional markets segment. Regional markets generated $2.45 billion of operating revenues, which represents a decrease of 3.9% over fourth quarter a year ago. Strategic revenues in this segment grew to $914 million in the quarter, up 3.6% over a year ago. Legacy services revenues for the segment declined $120 million or 7.6% from fourth quarter 2011, due primarily to a continuing decline in access line and long distance revenues, partially mitigated by implementation of the ARC in July of 2012. The expenses declined $20 million or 1.9% compared to the previous year driven mainly by lower employee related and data integration expenses which were partially offset by higher Prism TV cost. Moving to Slide 17, our Wholesale Markets segment generated $908 million in operating revenues, a decline of 5.5% from fourth quarter 2011. Strategic revenues for Wholesale Markets were $572 million, up slightly from fourth quarter 2011, primarily driven by growth of Ethernet services offset by rate compression in special access services as customers transitioned from copper based to Ethernet based services. Wholesale Markets legacy revenues declined by 14% to $335 million reflecting the continued decline in access and long-distance minutes of use and the implementation of the CAF Order write step down. Operating expenses for the quarter were $271 million, 13% below the same period from the prior year driven by lower access and other cost. Moving to slide 18, Enterprise Markets - Network segment generated $671 million in operating revenues during the quarter, which represented an increase of 5.7% from fourth quarter 2011. This marked the fourth consecutive quarter of sequential growth in recurring revenues for the Network Services segment. Fourth quarter strategic revenues for Enterprise Markets – Network increased by $25 million or 8% to $346 million from fourth quarter 2011, driven primarily by strength in high bandwidth services such as; MPLS, Ethernet and Wavelength. Excluding private line services, strategic revenue was up nearly 13% from a year ago. Legacy revenues were basically flat from a year ago period while data integration revenues increased $12 million or 12% due to higher equipment sales and professional services revenues from government and enterprise customers. Our total segment expenses were flat year-over-year. Now, turning to slide 19, our Enterprise Markets data hosting segment, which is primarily legacy Ciber's operations, this segment generated $292 million in operating revenues representing an increase of 13% from fourth quarter 2011 revenues of $259 million. This growth came primarily from year-over-year increases of 9.6% in colocation revenues, 21% in managed hosting and cloud services revenues and a 3.6% increase in network services revenues. Fourth quarter 2012 EMG data hosting revenues include approximately $13 million of revenue contribution from the Ciber IT outsourcing assets acquired in October 2012. Excluding this revenue managed hosting revenue grew about 8% year-over-year. Soft bookings in the third quarter 2012 and higher than normal churn primarily due to customer bankruptcy events pressured fourth quarter 2012 data hosting revenue. Enterprise markets data hosting operating expenses were $235 million in the fourth quarter compared to $202 million in fourth quarter year ago. This increase of 16% is driven by added operations and sales and marketing headcount to support revenue growth including headcount to the savvisdirect, and enabling sales channels, along with expenses related to the acquisition of Ciber ITO assets not present in the prior period. In early January we announced an organizational realignment combining our network services business sales and operations teams into one organization which is led by our Chief Operating Officer, Karen Puckett. Slide 20, highlights the revised reporting structure. The reorganization combines business sales and operations functions that previously resided in the enterprise markets network services and regional markets organizations. We believe this change allows us to better serve our business customers by streamlining our end-to-end service delivery and support and sales of network services to our enterprise customers by creating one cohesive organization. Beginning with results for first quarter 2013, the company will report the following four segments, consumer, business, wholesale and data hosting services. While the consumer and business segments will be different from today's reporting structure, wholesale and data hosting segment will remain unchanged from what was have previously known as wholesale markets and enterprise markets data hosting. To assist the investment community in understanding the underlying trends in each segment, we expect to provide historical pro forma segment financial statements when we report first quarter 2013 earnings. On slide 21, we provide our first quarter and full year 2013 guidance. We expect first quarter 2013 operating revenues and operating cash flow to increase compared to fourth quarter 2012, primarily due to the decline in legacy and data integration revenues. Similar to last year, we also anticipate a decline in depreciation and amortization expense in the first quarter of 2013 driven primarily by the impact of our annual review and updated depreciation and amortization writes. This anticipated lower level of depreciation and amortization expense, approximately $100 million below the level in the fourth quarter 2012, is expected to more than offset the decline in operating cash flow and result in an increase in adjusted diluted EPS in the first quarter of 2013 compared to fourth quarter of 2012. For first quarter of 2013, CenturyLink projects total operating revenues of $4.46 billion to $4.51 billion and operating cash flow between $1.83 billion and $1.88 billion. Adjusted diluted EPS is expected to range from $0.67 to $0.72 per share. For the full year 2013, CenturyLink expects total operating revenues of $18.1 billion to $18.3 billion reflecting a year-over-year revenue decline of 0.5% to 1.5%. Operating cash flow is expected to be between $7.3 billion and $7.5 billion and adjusted diluted EPS is expected to be $2.50 to $2.70. Capital expenditures are expected to range from $2.8 billion to $3 billion driven by spending in our key growth areas, data hosting will spend $325 million to $375 million, HSI expansion and HSI capacity will spend between $350 million and $375 million, and our Fiber-to-the-tower will continue to spend about $250 million to $300 million in this area, our Prism TV with the launch of the Phoenix and one other market, we expect to spend $100 million to $150 million and maintenance CapEx is expected to remain around the 20% to 25% of total capital expenditures level. We anticipate free cash flow for full year 2013 between $3 billion and $3.2 billion. CenturyLink anticipates full year 2013 operating cash flow and free cash flow to decline from full year 2012 primarily driven by the impact of the decline in legacy revenue along with a lower level of incremental synergies in 2013 compared to the level of incremental synergies achieved in 2012. The company also anticipates a decline in depreciation and amortization expense for full year 2013 compared to full year 2012. That concludes our prepared remarks for today. So at this time I will ask the operator to provide instructions for the Q&A portion of the call.

(Operator Instructions) Our first question comes from Mike McCormack from Nomura. Michael McCormack - Nomura: Stewart, can you just sort of dig in for us on the cash cost. Obviously in '13, you have got some pressure on EBITDA and you mentioned the fat that the Qwest synergies don’t recur. I suspect that won't happen in 2014 either. So as we look out at EBITDA trajectory, is there anything unusual in '13 from a cash cost perspective or should we just expect an even level of potentially declining EBITDA tracking revenue or are there actual levers to pull on the cash cost side to get margins to at least stabilize?

Yes. So, Mike, basically, the cash expense drivers in '13 over '12, about $165 million or so is associated to lower incremental synergies that we will have in 2013 than we had in 2012. So lower incremental synergies of about $165 million. We will still increase the total run rate synergies from the $480 million that we exited 2012 to about $600 million by the time we exit 2013 but just the incremental amount will be less than last year. So the incremental synergies really, to a certain extent, masked the revenue mix shift that we had from legacy revenues which are very high margin revenues to the strategic revenues, which tend to be lower margin. Additionally, other expense drivers that we have for 2013 are Ciber. There will be about $45 million of incremental expenses there. Then in our IPTV there will be some incremental expenses there as well. Michael McCormack - Nomura: Okay, so when you think about the buyback, it still seems like that a fairly low amount of buyback over a fairly long period of time and stock tomorrow will likely get beaten pretty hard. Is there any way that you guys could accelerate that?

We could depending on what happens to the stock price, Mike. I mean we could be in and potentially buy the shares a little bit sooner or use some financing to purchase the shares a little bit sooner than the 24 month period. Michael McCormack - Nomura: Okay, thanks guys.

We do plan to buyback about 8% of our total outstanding though with the $2 billion.

Thank you. Our next question comes from Batya Levi from UBS. Batya Levi - UBS: Thanks, I just want to reconcile some of the prior comments that you had made. I think you had mentioned that if you are comfortable with revenue trends improving, stabilizing, you could even consider maybe a small dividend increase just to keep it consistent. I guess I just want to get a sense of how you feel about revenue trends going forward? Your 2015 dividend payout guidance of lower than 60%, I think implies a pretty significant decline to free cash flow per share from the current levels. Can you talk about that as well?

Yes. So, Batya, the decline that you that you can back into basically by looking at the dividend payout ratio or the approximate dividend payout ratio in 2015 is really due to the fact that we, in 2014, would utilize all of the federal net operating loss carryforwards that we have and our cash taxes will increase substantially. But we expect, barring any changes in the tax loss, to increase substantially in 2015. So that’s the reason. That's one of the reasons we decided to go ahead and take advantage of this at this point in time and be proactive and try to address the dividend and again try to return more cash to shareholders over the next two years before becoming a full tax payer to allow us to retire 8% or more of our shares which will reduce the dividend even at the new rate by little over $100 million dollars, probably between now and 2015, which again allows us to really be a lot more comfortable with the dividend that we are moving to on a going forward basis. Batya Levi - UBS: Excluding that increase in the taxes, how do you think about revenue trends from here towards '15 and EBITDA and CapEx if you could talk a little bit about that too?

Yes. So, Batya, we still expect, as Glen indicated, revenue to flatten out in 2014 compared with 2013 and we would hopefully be able to grow revenue thereafter at least that's our current thinking. EBITDA may not stable quite as quickly, because we will continue to have some of the revenue mix shift where you continue to lose some of the higher margin revenue that's replaced with lower margin revenue, but we would be helpful that we would continue to close the gap in '14 and '15 in terms of flattening out EBITDA, and eventually starting to grow EBITDA and all of that is really without any business as usual, expense cuts in the event we are able to find ways to cut costs to a certain extent over and above the synergies that we expect to get over the next couple of years. It would enable us to be able to hopefully get to EBITDA stability a little quicker. Batya Levi - UBS: Okay. Thanks.

Thank you. Our next question comes David Barden from Bank of America. Your line is open. Can you un-mute your phone if you have your phone on mute. Our next question comes from Simon Flannery from Morgan Stanley Simon Flannery - Morgan Stanley: Thanks a lot. Can we talk about the capital spending? How should we think about the level for 2013? Is that a run rate level or some of the projects like IPTV and Fiber-to-the-tower peaking this year, if you give us a little color there? And on the cost side, can you update us on a couple of items, the labor negotiations and any contributions to the pension fund? Thanks.

Simon, on contributions to the pension fund, we made a contribution of about $146 million and $147 million in the early 2013 and that will suffice we believe. It will certainly cover all the required contributions that we have to make this year. So, I think we've done what we need to do there for this year. In terms of CapEx levels, yes, I'll let Stewart do it.

In the $2.9 billion level that reflects all the investments we make in the new initiatives, Simon as you pointed out. Excluding Fiber-to-the-tower about $600 million of that is success based capital. We have revenues locked in and we really expect that from locked in, and we make those investments. We included Fiber-to-the-tower, we have the contract. We have close to $900 million, almost a third of that expand is success based. So, we continue to build out our systems and we have opportunity to grow, do hosting or Prism, we'll do it on a success basis really. We expect to continue to drive additional revenues. If we are successful in these areas, if we have more opportunity, we'll continue to invest in these areas, we're not - we don't have to, so we'll see how this goes, but right now in 2013, again we really have about a third of our CapEx in success based type CapEx expenditures. Simon Flannery - Morgan Stanley: And on the labor deal or negotiations?

Yes. On the labor, the current contract expired back in October and we've been working with the union agreed to extend the agreements day-by-day or day-to-day, as we continued the negotiations. I think everybody is negotiating in good faith. We're making progress, but it's been obviously much slower than we had hoped or expected, but we all believe we are all making progress. It is our desire to reach agreement that will help the company better align our cost with a very competitive marketplace while still providing really good competitive wages and benefits for our employees and we think we will get there and we are hopeful that we reach agreement with union in the next several weeks, but it's been much slower than we've expected, but we believe we are making progress.

Thank you. Our next question comes from Frank Louthan from Raymond James. Frank Louthan - Raymond James: Great. Thank you. So, in going through the process, just curious why wouldn't you consider cutting the dividend further or if you're applied standing up to the rating agencies a little bit, but why not leave the dividend where it is and just buyback less stock. What is sort of the thinking there. And if you're on a path to get to the point, where EBITDA is stable, why do we have to necessarily consider cutting the dividend or is there or is it just taking that much longer than your original plan when you look back in and acquiring Savvis and Qwest, is it just taking longer to get there?

I will start and let Stewart follow-up, Frank. First of all, we didn't think it was good to reduce the dividend further. We know that we believe we need to return cash to shareholders. We believe a 25% cut is something not what we would want to doing in a perfect world, but something we think is important to do now. We do want to maintain the payout ratio. We've historically been comfortable with, and that 60% below or less than 60% ratio. We felt like if we payback, if we continue with the dividend now, there is no real benefit in one sense, because once there is uncertainty about the 2015 payout ratio, then it's really like a one-time dividend or payout sales, we don't think is the right thing to do, so we decided it was better to buy stock back with those funds, plus additional another 50% of our free cash flow or so and take advantage of that accretion. And with the dividend at a level we are very comfortable with going forward. What we won't see that we think the concern about the level of dividend we'd be paying. So, this really how we came to our conclusion. Stewart, you want to add anything to that?

It's really, Frank, just thinking through and looking at what the cash taxes would be in 2015 and the impact of that on free cash flow and on the dividend payout ratio, and again the opportunity to retire 8% or more of the shares between now and then and really help further. I mean it's accretive to free cash flow per share and it will reduce the aggregate dividend going forward. Frank Louthan - Raymond James: Okay. Nothing on the operations side that's not trending the way you had been planning all along that makes you more concerned about in 2015 having to face of bigger dividend crisis?

No. That was not part of the decision. We bake this based on from we believe from the position of strength, Frank, and look into the future of the company also there is no plans. We don't have any major acquisitions on the radar had nothing to do with our decision, so it was strictly what we think the best for the long-term growth of this company.

Thank you. Our next question comes from Phil Cusick from JPMorgan. Phil Cusick - JPMorgan: Hi, guys. So, with the lower payout ratio, can you help us think about the opportunity that this creates in terms of spending more CapEx or maybe going more aggressively after growth initiatives like the video business which is going to drive a little more dilution upfront?

Phil, So, if we bought shares back with the free cash flow then basically we will not have the additional capital to invest over and above what we are investing today unless we lever the company up, so I mean I guess that's the other thing. As part of this too, we increased the leverage ratio to somewhat less than three times or no more than three times. But basically, we plan on using the free cash flow that's created as a result of the dividend reduction which is about $450 million a year to repurchase shares plus we'll add a use of about $1.1 billion of our free cash flow to repurchase shares as well. Phil Cusick - JPMorgan: Okay. And, so we should look at CapEx as being essentially flat for the next few years?

That's our thinking now. Pretty flat, we could bring it down some, cut it off a little bit depending on. It's really based on the success of these new initiatives, I mean, what we think we can drive in terms of revenue and margins going forward.

Yes. Fiber-to-the-tower will start winding down, I guess 2014. Phil Cusick - JPMorgan: Okay. Can you help us think about your thought process on acquisitions here? I would think that given the hit you stock probably takes tomorrow that a stock-based acquisition might be a little tougher, but this buyback pool could leave some room for cash acquisitions instead how are you thinking of that?

Right now, where we are focused on our key growth initiatives, we believe we have a lot of opportunities of organic growth with our broadband expansion and Fiber-to-the-tower work that managed hosting cloud services and our Prism TV services. So with all those, we are very comfortable. We do not need to make an acquisition in order to grow the company, to grow revenues and margins. That doesn’t mean, we won't consider. We always have but we don’t see a need to go out and acquire. We will look opportunistically at acquisition as a way to possibly grow the company faster but nothing that we feel we need to go out and have to go out and do it.

Thank you. Our next question comes from Tim Horan from Oppenheimer. Tim Horan - Oppenheimer: Thanks, guys. For what it's worth, I think it's really ingenious and balance the restructuring here makes a lot of sense. Can you maybe just elaborate on the acquisitions? Are there any areas of divestitures that might make some sense for you? You haven't done any in a little while. Maybe, any areas of kind of obvious low hanging productivity improvements at this point? Thanks.

No, Tim. There is nothing significant. At least not that we could talk about right now. There are some obvious things on divestitures we have looked at before that we could do but nothing that we feel like would really improve our growth rate at this point in time or our margins. So, don't expect any divestitures today. The low hanging fruit. I don’t see, Stewart, you think is? I don't know anything that's out there that would drive productivity in the near term. The biggest thing I think is improve our growth. It's just the improvement of the economy. We are still seeing. Although we have had good result in our enterprise businesses this past year, we are still seeing a long decision making cycle out there. Although we are encouraged somewhat as far as some of the successes we have had in the recent months, we are still concerned about the economy and are concerned that our potential customers have had over the fiscal cliff and the other regulatory issues that are out there, the debt saving, those kind of things. If we can get those out of the way, we are hopeful we will make through this economy turnaround. But if that happens and that's the biggest thing, we think, could drive faster growth for us. Tim Horan - Oppenheimer: Then, lastly on the rating agencies. Are they focused on debt-to-EBITDA? Or is it interest coverage at this point? Maybe where would they like to see you with debt-the-EBITDA, net debt-to-EBITDA ratio? Thanks.

Debt-to-EBITDA. It is basically varies from agency to agency. I know Moody's has their release out. I think Fitch has their release out now. S&P release is probably out by now as well.

Thank you. Our next question comes from Scott Goldman from Goldman Sachs. Scott Goldman - Goldman Sachs: Hey, thanks guys. Appreciate you taking the questions. I guess I will layoff on the buyback and dividend questions and we have hit a lot of that and just ask about the Savvis side of things or the hosting side of things. I know Stewart you mentioned that Savvis was up or the hosting was up about 8% year-over-year, but if I back out the announced contribution from the Ciber ITO, it looks as though that segment was pretty flat sequentially. So, I wonder if you could just talk a little bit about what you are seeing inside of the data center stuff at colo managed hosting side of things, and what you are seeing from the interest in savvisdirect and what impact that could have in 2013?

Yes, Scott. The 8% year-over-year growth was without Ciber. But if you do, you are right. If you look sequentially from third to fourth quarter, basically the revenue was flat. That's really due to the things that we brought up on the call, the bankruptcies that we had during the quarter and that's really about it. We are hopeful that we had a good quarter in terms of bookings for fourth quarter. Some of the softness that we saw in fourth quarter rather was related to third quarter bookings which were soft. So we are hopeful again with the good bookings in fourth quarter it will take a couple of quarters probably to turn that around but we had the best bookings in fourth quarter we had in four years basically. Jim, did you want to comment on that?

I would say that the key issues that affect 2013 is we have done a lot of work on integrating and enabling the CenturyLink network channels and so on and we will start to see that have positive revenue impact in the second half of the year. So you take that and you take the opportunities there with savvisdirect, which Glen mentioned, we are getting a positive reaction. There, again, is a very large customer base that this appeals to, in the CenturyLink base that we believe will start to have some very positive impact in the third and fourth quarter and particularly in 2014 and 2015 it can be a very big increment to the overall hosting revenue. The colo business is stable. It is kind of a managed business right now and directly related to investment. So we feel good. We had a good colo year but it was at a controlled level. So, managed hosting is the key. It is where the margins are at, where the value add is that and that's what we really need to drive on in 2013. We have plans in place to do that. Scott Goldman - Goldman Sachs: Great, and if I could just follow-up and I apologize if I missed this earlier but Stewart, if you could just talk about how much investments on the CapEx front you are spending on the data center side in '13 and how that compared to '12? I know you are pretty active on data center expansions in '12.

Yes, we have got $325 million to $375 million in '13 and that was probably in '12. Let me grab that right quick. Yes, the total cash CapEx was about $318 million in '11. Scott Goldman - Goldman Sachs: Great. Thanks, guys.

'12. I am sorry, in '12. Scott Goldman - Goldman Sachs: Okay, understood.

Thank you. Our next question comes from David Barden from Bank of America. David Barden - Bank of America: Hey guys, thanks for taking the question. I will go back to the strategy change. I guess I wanted to give you guys maybe the opportunity. A lot of the questions have been okay. So Stewart, if nothing has changed in business from a year ago and we are looking at the same free cash flow in 2015 today that we are looking at before but what we have done is we have chosen the strategy now that's both led to debt downgrades and the 15% cut in the stock price but the argument is that we are going to create long-term value, but there is nothing on the acquisition table, there is nothing on the CapEx investment front that's going to be do anything different than what's been happening. So, what is the full argument now for CenturyLink now that you have done what you have done? How is CenturyLink better for the stockholders now?

So, David, I think the first is that basically, we were going to get downgraded anyway. Based on the 2013 budgets and plan, short of cutting operating expenses or investment in areas that we think long-term will help us get to revenue and EBITDA stability. If we hadn't cut those, we couldn't have kept the investment grade rating. The other way to keep the investment grade rating would have been to cut the dividend and use that to pay debt back. So, I mean we were going to get downgraded anyway. It would have been worse, I think, for us to cut the dividend and basically use that to pay debt back at this point. So looking at that, I guess as we have focused on 2013, we really started focusing on '15 and working through and trying to look at what taxes, cash taxes would potentially go to in '15 and that's when we realized as part of that that basically the dividend payout ratio was going to increase significantly in '15, if we didn't do something. I guess we could have waited a year and a half or two years and see how that worked out but we decided it's better to be proactive and really try to buy stock back in the interim and keep investing in the business. Nothing has changed in the business really. Just keep investing in the business to stabilize and grow revenue and EBITDA. We felt like we were better off going ahead reducing the dividend now, buying shares back which reduces the shares outstanding by the time we get to 2015 which helps us really again stabilize and be confident that we can continue with the dividend that we have moved to, which is more in line with our historical payout ratio in the last two to three years in '15 than we would have been had we not done this at this point.

I will just add, Dave that first of all, there is better visibility, as Stewart said, in 2015. Secondly, more confidence in our growth initiatives. We have seen those become real. We are where we made a choice to keep the dividend or increase the dividend and reduce our investment in the business, which we don't think is right. If we had not done this, we are looking at 2015 we think we are putting pressure on the stock price as we went into certainly in the '13 and '14, as we came forced to be cash taxpayer. So, you take all into consideration, this is the best strategy for our company long-term and for shareholders long-term. That's our view of it.

Thank you. And our next question comes from Nicole Black from Wells Fargo. Nicole Black - Wells Fargo: Hi, guys. Thanks for taking the question. I guess as a fixed income analyst, what I want to ask about is could you take a minute to discuss your future debt issuance plans now that we are firmly in, in high yield status, are you going to continue to use the Qwest Corp entities to refinance Qwest Corp paper or will all future bonds come out of the CenturyLink parent box?

Yes. So, Nicole, Qwest Corp and Embarq will remain investment grade at Fitch, basically that's in their release. Moody's basically indicated in their release that although they just put everything on review for downgrade that it was likely that Qwest Corp and Embarq would retain their investment grade rating, so we really believe we will retain the investment grade ratings at Embarq and Qwest Corp. We carry about $7.5 million of debt of the $20.5 million that we have outstanding is carried at Qwest Corp, so we will continue to use the Qwest Corp entity to refinance borrowings that come due at Qwest Corp. Everything else our current plans are to as they were in the past really to refinance everything else that comes due you up at the parent company and of course that will be non-investment grade BB+ at Fitch, Moody's will come out with their rating but they indicated pretty strongly I think that the family rating would go down only one notch, so we will refinance at the parent company. If you look at our debt maturities over the next three years over '13, '14 and '15, we only have about $725 million of maturities that will need to be refinanced at the parent company level. The remainder of the maturities that come due are at Qwest Corp, so we feel real comfortable with our financing plan going forward, our credit facility has paid down close to $300 million now from about $800 million at the end of the year and it's a $2 billion facility. We don't plan on drawing it down to more than $1 billion so that we keep at least $1 billion capacity on that facility just so that we will always have plenty of liquidity, so those are really our plans going forward. Nicole Black - Wells Fargo: Okay, so if Embarq has a chance of keeping its status would you revive that as a potential issuing entity down the road?

Nicole, we haven't really talked about that and we will need to think through that to see if that's a possibility. I mean, it would mean it would have to be another reporting entity and we will just have to see if it's worth the effort of doing that. We have about $3 billion of debt today a little less than $3 billion of debt today at the Embarq level. The first major maturity that comes up at Embarq is in 2016, a little over $1 billion, so we have some time to decide if we want to refinance at Embarq as well. Nicole Black - Wells Fargo: Okay. Then last question. The covenants that are in place on the bank facility side, because that's good for another four years, the four turns at the parent level and 285, 235 tests on Qwest. Are those going to stay unchanged even with the ratings agency actions?

Yes. Those stay unchanged even with the rating agency actions. We do have couple of covenants on QCII that bring back, but they are not material at all and really don't impact us. Nicole Black - Wells Fargo: Okay. Well, it has been delightful covering you guys as long as I've been able to, so good luck.

Thank you. Our next question comes from Donna Jaegers from D.A. Davidson. Donna Jaegers - D.A. Davidson: Hi, I got a question for Karen Puckett, since she is in the background there. I was just curious given that Enterprise as such is your growth area, what Century is doing to change or to improve the go-to-market in the out-of-region market for CenturyLink?

Donna, the team had a great performance in 2012. We really want to continue to accelerate that. We have opportunities. We're very focused not only on the sales front, but also on the customer experience, because we believe that's a big differentiator for us right now against our competitors, so we are going to leverage that and get the tools and the resources so our sellers can be more productive in the upfront, so those two bookings are what we plan on doing differently. Donna Jaegers - D.A. Davidson: And given that Comcast is coming at you guys heard in region offering twice the bandwidth to small business customers. What's your response there competitively?

Comcast is certainly a competitor, but I would say relative to the amount of the fiber that we have in end market, and the amount of fiber that we have already to buildings, we feel like we are set up pretty well. We are packaging that, so we have symmetrical capability into those buildings that very high speed Ethernet connections. That was our savvisdirect product in terms of computing as such, packaging, put us in a really strong position against our competitor be it Comcast or any of them.

Thank you. And our final question comes from Tom Seitz from Jefferies. Tom Seitz - Jefferies: Yes. Thanks most of mine have been answered. I guess maybe could I ask for the little bit more color on how you feel like the savvisdirect product rollout has gone? Can you talk about how you are marketing it now that's it' out of beta? Are you systematically hitting your captive customers base any more white label deals just any color you can provide would be great?

I'll start and Jim may want to add to this, but up until through this month, through January and February, we have not done any advertising. Basically, it's all been just on the web and word-of-mouth and put it out on advertising in the internet world. We've been very pleased so far. We've also marketed some with our direct sales channels and they have been successful early on with that, we are seeing a lot of demand for the product, feel really good about it, and again with no advertising, we will began advertising heavier with direct mail with more or net-type advertising, and we expect to accelerate going forward. We believe it's going to be a very competitive product and again initial reaction has been very positive.

I would just add to cut two other data points. One, we are seeing very positive response on the private label. The white label product that we are looking at, we signed one order and we've got a lot of interest, so those could be pretty significant in the future. The second is around the dedicated hosting environments low-end dedicated hosting environments that we are promoting. We are seeing very strong information and demand around those. Those take a little longer to sell because they're basically supporting a dedicated environment, but they're bigger ticket items so both of those are a very positive early on indications.

Thank you. This concludes our question-and-answer session for today. I would like to turn the conference back over to Mr. Glen Post for any closing remarks.

Thank you, Saeed. If you will turn to slide 24, so we conclude today's call. We are pleased with the continued progress we made during the fourth quarter towards stabilizing our top line revenues and believe our continued investment in key strategic opportunities will help us continue to drive growth both, near-time and long-term. Our strategic revenue growth continues to strengthen CenturyLink's competitive positions and our guidance reflects our expectation that our revenues from these strategic services will continue to grow in the months ahead. Demand from business customers for best network and hosted IT solutions remained strong. Also, the expansion of our Prism TV service and the recent launch of managed hosting and cloud services for small and mid-sized business customers will further strengthen our product portfolio and provide us additional revenue growth opportunities in 2013. Throughout 2012, we made good progress on our key strategic initiatives and we believe these growth areas continue to strengthen our competitive position going into 2013. And, lastly, we believe the capital allocation changes we announced today will allow us to continue to invest in these strategic initiatives. They will help stabilize our top line revenue and strengthen our company's position long-term, while continuing to return significant cash to shareholders. Thank you for joining our call today. We look forward to speaking with you in the weeks ahead.

Ladies and gentlemen, thank you for participating in today's conference. This concludes our program for today. You may all disconnect and have a wonderful day.