CenturyLink 2010 Annual Report Download - page 6

We expectthe Qwest transaction to be free cash flowaccretive immediatelyfollowing the
close,and we expect to achieve annual run-rateoperating expense synergiesof approxi-
mately$575 million over a three- to five-year period. Given our history of strong free cash
flowgeneration, we believe we will have the financial flexibility to continue to invest in
growthopportunities, effectivelymanageour leverageand return cash to ourshareholders.
Positioning forthe Future
With the advent of smartphones and a huge variety of Web-basedcontent andapplica-
tions,data consumption by consumersand businesses continuesto growdramatically.
At CenturyLink, we believe this growing demandfor data services will underscore the
importance of robust wireline high-bandwidth connections.
We arein the process of transitioningfrom a Time-Division Multiplexing(TDM)voice-
centric network to a converged Voiceover Internet Protocol(VoIP) platformwith IP-based
applicationsthat meet the growing broadband needsof our residential andbusiness cus-
tomers. We continue to deploy fiber deeperinto ourmarkets to reach multi-tenantbusi-
nesses, multi-dwellingresidentialunitsand towersitesof the major U.S. wirelessservice
providers. With these fiber investments, we are able to deliverspeeds of 1 Gbps and
higher andstrengthen ourwirelessbackhaulcapacity. We havealso invested in technolo-
gies to increase copper-basedbroadband speeds to up to 10 Mbps for 65 percentof our
broadband-enabled accesslines and up to 50 Mbpsin select markets.
In addition to improvingnetwork speeds andcapacity, we are investing in applicationsthat
leverage ourbroadband network.We expect to launchPrism™TV and extendkey services
such as Ethernet, MPLS and VoIP into additional markets in 2011. We are developing other
advanced applicationsincluding converged voicecommunications, data hosting,business
continuity and disaster recovery, managed IP and dedicatedIP services. With continued
customer-focused investments,we believe we will have a competitive advantagein
meeting the growing demandfor data services.
Thefuture holds exceptional opportunity forbroadband and dataservice providers, and
we believe CenturyLinkhas the assets, abilitiesand experience to take advantageof this
opportunity.With the Qwest acquisition, CenturyLink has a network with nationalbreadth
andan operating model that cultivates local depth.We havean experienced leadership
team with a proven trackrecord of success, and we are maintaining a culture that is guided
by ourUnifyingPrinciples, which include fairness, honesty andintegrity, commitment to
excellence, positive attitude,respect, faithand perseverance.
We arein a strong financial position with a soundcapital structureand significant free
cash flow to sustain our dividend andsupportstrategic investments andacquisitions.
Ourachievements in 2010and prior yearsdemonstrateour ability to execute and compete
effectively in diverse markets.
CenturyLink hasa long history of
successfully acquiring, integrating and
operatingcomplementary assetsthat
position the company to deliver advanced
products andservices.
CENTURYLINKQWEST
10.5% INCREASE
Over the past 15 years, ending
December 31, 2010, we have delivered
an average annual return to shareholders
of 10.5 percent, exceeding both the
S&P 500and our peer companies.
28YEARS OFEXPERIENCE
Each member of our leadership team
has a proven track record of success
andan average of 28 yearsin the
communications industry.
4 GROW TH +OPPORTUNITY AND SCALE