Chris Stansbury: Yeah. Good question, Frank. I mean we talked quite a bit about how the returns profiles of these two businesses couldn’t be more different, right? The consumer business is one invest a lot in capital, and then your payback period is measured in high single-digit, low double-digit kind of territory. So, a very long time to return even with great performance. Now that asset, particularly given the quality of the fiber that we’re putting in and the scalability of that, is about as future-proof as it gets. So, the beautiful thing about that business is a very long tail of returns once you get to that payback. The enterprise business is one of higher margins and faster returns, where you’re measuring your payback window in low to mid-single digit kind of years.
And when you look at the disruptive nature of the products and services we’re bringing to market around NaaS and ExaSwitch and our security offerings, that disruption in our ability to not just keep and nurture existing customers but expand that customer base has a much greater and faster return. So that’s really why we see enterprise as the right place to spend. And again, I keep hearing about overbuild activity, overbuild activity, but we’re simply not seeing it. The higher cost of capital that everybody faces right now is slowing down those builds. So, what we’re doing by continuing to invest in that 500,000 kind of enablement range every year is still, I would say, quite robust compared to what we’re seeing on a competitive front. So, we think overbuild activity is a much lower risk given today’s economic environment.
Frank Louthan: All right. Thank you.
Mike McCormack: Cersei, we have time for just one more question.
Operator: Okay, thank you very much. And our final question comes from the line of Jonathan Chaplin with New Street Research. Please proceed with your question.
Jonathan Chaplin: Thanks a lot. Since I’m last, I’m going to steal two, if I may. So the — I was fascinated, Chris, by your comment that you’d spend a lot of time talking to your creditors, and the deal that they struck with you is a vote of confidence in the turnaround strategy. And I’m just wondering what you shared with them in the context of those negotiations that’s sort of incremental to what you’ve been able to share with The Street. I’d love to get some sort of — if you could expand a little bit just on sort of — yeah, the — what needs to…
Chris Stansbury: Yeah. I mean that’s obviously a very regulated space. And I would say that what we serve with them that was different than Investor Day was what was included in the blowout materials today. So, you all have access to that. We have full visibility, for example, around the tax issue that we talked about earlier, as well as the fact that nearer term, we’re seeing some impacts from revenue. I think when I say that they believe in the strategy, they believe in our ability to disrupt telecom, they believe in the innovation, they believe in what we’re doing to migrate revenue from legacy services to new. And no one else is doing that. No one else is investing in this space, and it’s a huge opportunity for us because of our focus. So that’s — I mean what we share with them is what we shared with you, especially when you consider the blowout information.
Jonathan Chaplin: Got it. That helps. And then my second question is, I mean, it’s really just a continuation of the question that Greg and the question that preceded — Frank’s question, which is, it seems like you’ve got sort of two very different opportunities and — one in Mass Markets, one in enterprise. They’re on very different return profiles. And in fact, under the sort of the current circumstances, you don’t have the resources to pursue both, and so you’re going after the return of enterprise. Given your circumstances, that totally makes sense. But isn’t the right — the sort of right course of action in a resource-constrained environment like you’re in to run a process to sell Mass Markets to somebody that has the capital to put into it at the moment, take full advantage of the opportunity there, both sort of organically with the markets that are there plus the big BEAD opportunity that’s coming and all the rest of it?
Wouldn’t that just be a lot more valuable in someone else’s hands right now?
Chris Stansbury: Well, look, I would say that that’s a consideration that we look at regularly. But again, I want to be clear, we’re talking these last set of questions, and I’m going to challenge all of you kind of in your thinking about it, the questions would suggest that we’re stopping our investment in consumer. We’re continuing to invest at the pace we’re embedding at this year. We’re going to continue to add in the range of 0.5 million enablements a year to our 3.5 million enablements that exist today. We’re focusing on penetration and subscriber growth and ARPU and returns. At the same time, we’re continuing to build those 500,000 enablements. So very, very clearly, I want everyone to understand we’re continuing to invest at a healthy pace in that business, particularly compared to what our competition is doing at this very moment given the high cost of capital.
So that’s an important point. Now the question you raised, though, is the right question. And I would — we have been very public in saying that the consumer space is one that is ripe at some point in time for consolidation. When that happens? We don’t know. Our job is to improve the EBITDA and the return profile of the business that we have, continue to invest in its future. And if and when the right time comes, then we’ll consider those options. But our focus right now is on continuing the pace of builds that we’re at today and driving improved returns.
Jonathan Chaplin: Got it. Thanks, Chris. I really appreciate it.
Mike McCormack: Thanks, Jonathan. Cersei, with that, we’ll end the call.
Operator: Thank you very much. And we’d like to thank everyone for your participation and for using the Lumen conferencing service today. This does conclude the conference call, and we ask that you please disconnect your lines. Have a great day, everyone.
