Windstream Holdings, Inc. (NASDAQ:WIN) Q3 2016 Earnings Conference Call - Final Transcript

Nov 07, 2018 • 10:00 am ET


Windstream Holdings, Inc. (NASDAQ:WIN) Q3 2016 Earnings Conference Call - Final Transcript


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Good day, ladies and gentlemen, and welcome to the Windstream and EarthLink merger and Q3 update call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time.

{Operator Instructions}

As a reminder, this call is being recorded. I would like to introduce your host for today's conference, Christie Grumbos, you may begin.

Christie Grumbos

Thank you, Leanne. Good morning, everyone. And thank you for joining our call today. Earlier this morning, Windstream issued a joint press release with EarthLink on our planned merger. Both companies also issued their third-quarter earnings releases.

We will discuss all three topics on today's call and have posted the presentation slides, along with earnings materials on each company's investor relations website. Specifically for Windstream, I should note that we have changed the name of our carrier business unit segment to wholesale, which is referenced in this presentation.

Today's discussion includes statements about expected future events and financial results that are forward-looking and subject to risk and uncertainties. A discussion of factors that may affect future results is contained in Windstream's and EarthLink's SEC filings, which are available on our websites. With me this morning are Tony Thomas, Windstream's CEO, Joe Eazor, EarthLink's CEO, who will discuss highlights of the planned merger, and Bob Gunderman, Windstream's CFO, and Louis Alterman, EarthLink's CFO. At the end of the call, we will take your questions. With that, here is Tony Thomas.

Tony Thomas

Thanks Christie. Good morning everyone. Joe and I are pleased to be here with you this morning to discuss the merger of Windstream and EarthLink. We have great respect for Joe and EarthLink's talented team and their track record as innovators within our industry.

Both companies have made significant progress, executing our strategies, and this combination propels that progress by creating a stronger, more competitive business to serve our customers, while increasing free cash flow and reducing leverage on Windstream's balance sheet. We believe this merger will create significant benefits and drive value for stakeholders of both companies.

Slide 4 has a snapshot of the compelling strategic financial drivers of the transaction. Operationally, EarthLink's and Windstream's corporate business unit strategies are aligned, providing the ability to advance our respective strategies more broadly, while improving competitiveness with enhanced scale and expanded services.

EarthLink's network adds significant value to Windstream's assets. The geographic footprint complements Windstream's existing network and adds strategically located unique routes that will provide cost savings and increased sales opportunities. At the same time, Windstream's nationwide reach will create significant value for EarthLink's existing businesses by reducing the cost to serve customers.

We anticipate achieving in excess of $125 million in annual synergies, which have a net present value of approximately $900 million, including integration costs. With Windstream's pro forma ownership of approximately 51% of the combined company, this represents value creation of over $4.70 per Windstream share and $3.85 per EarthLink share. In addition, we will benefit from EarthLink's net operating losses, which are