CenturyLink 2007 Annual Report Download - page 3

To Our Shareholders
In 2007, CenturyTel generated record free cash flow while further strengthening
our position as the broadband provider of choice in the mid-size cities and
towns we serve. We expanded our broadband product and service offerings,
delivered a consistently positive experience for our customers, and improved
the efficiency and effectiveness of our organization. Through the hard work of
our 6,600 CenturyTel employees, we continued our transition from a traditional
telephone company into a premier broadband communications provider.
Strengthening our
Broadband Business
We achieved solid operating results in
2007 while continuing to invest in our
broadband future. We increased our
broadband penetration of enabled lines
from approximately 22 percent at year-end
2006 to 31 percent, ending 2007 with
555,000 high-speed Internet customers.
We also grew broadband-enabled lines
from approximately 79 percent of total
access lines at year-end 2006 to nearly
84 percent at year-end 2007. Additionally
we responded to our customers’ demand
for greater data speeds by increasing
available bandwidth in the majority of our
customer connections.
We completed the acquisition of
Madison River Communications in April
of 2007. This acquisition added approxi-
mately 164,000 access lines, virtually all
of which are broadband-enabled. We also
gained a 2,400-mile fiber network that
complements both our existing local
exchange operations, particularly in south-
ern Alabama, and our existing regional
fiber network. We believe there are attrac-
tive growth prospects in the Madison River
markets, as well as the opportunity to
achieve significant synergies with our
current operations. We expect to realize
approximately $17 million in annual syner-
gies by mid-2008.
Generating Record Free Cash Flows
Our strong operational performance in
2007 drove excellent financial results. We
generated record free cash flow and more
than $1 billion in net cash from operating
activities – a key financial measure for both
CenturyTel and the investment community.
During the past four years CenturyTel gen-
erated more than $3.8 billion in cumulative
net cash from operating activities. As a
result, we have been able to make signifi-
cant network investments and acquire
strategic assets while maintaining reason-
able leverage and returning significant
amounts of cash to our shareholders.
This stable, predictable nature of our cash
flows helps us grow our business and
drive attractive shareholder returns.
We completed our $1 billion share
repurchase program in June of 2007 and
subsequently announced a new $750 mil-
lion repurchase program. Through year-
end 2007 we completed approximately
$158.5 million of the $750 million program,
and we expect to complete the program
on or before its expiration date of Septem-
ber 30, 2009. Over the past four years,
we have returned more than $2.3 billion
to shareholders through dividends and
share repurchases.
1
High-Speed
Internet Customers
in thousands
83
03
143
04
249
05
369
06
555
07
200
400
600