CenturyLink 2015 Annual Report Download - page 4

2 CENTURYLINK
To Our Shareholders continued
We have a deep and improving asset base. At year-
end 2015, 30 percent of our markets were enabled
with speeds of 40 megabits per second (Mbps) or
faster — a speed that addresses the vast majority of
our customers’ needs — with many markets capable
of receiving 100 Mbps and higher. We have also
enabled fiber-to-the-premise for about 500,000
businesses and nearly one million households, making
CenturyLink one of the largest gigabit service providers
in the country.
As we move into 2016, we are committed to increasing
the market competitiveness of our broadband access
service offerings. We will continue to expand both our
gigabit-capable footprint and the number of customers
able to receive speeds of up to 100-200 Mbps through
bonding and vectoring technologies. Additionally, by
investing the approximately $500 million per year we
will receive in each of the next five years from the
federal Connect America Fund (CAF), we will bring
high-speed Internet service to approximately 1.2 million
rural businesses and households.
In addition to the reach and speed of our network,
we are enabling competitive video options for our
customers. We ended 2015 with more than 3.2 million
addressable Prism® TV homes, and we are currently
developing an over-the-top video offering to provide a
web-based, more dynamic and less-capital-intensive
video offering to a greater percentage of our total
customer base. We currently have only a small share
of the video market in our territory and believe we
can significantly grow market penetration for
these services.
We have the financial strength to both invest
for the future and return cash to shareholders
at attractive and sustainable levels. Over the last
several years we have invested an average of about
$3 billion a year in our business, principally to expand
the speed, reach and capacity of our network and to
enable our cloud, managed hosting and colocation
businesses. We expect to continue this level of
investment over the next several years, focused
primarily on continuing broadband expansion;
increasing our software-defined networking (SDN)
and network function virtualization (NFV) capabilities;
creating cloud-based, customer-driven service delivery
platforms; and investing in CAF Phase 2 markets.
We balance our capital investments with our
philosophy that the return of cash to shareholders is an
important part of our value proposition to investors. For
2016, we project our dividend payout ratio to be in the
60–70 percent range. Although we expect that payout
ratio to increase over the next couple of years, we
believe we can maintain our payout ratio at sustainable
levels going forward by balancing our capital program
with our operational performance.
This combination of growth opportunities, financial
strength and the consistent return of cash to our
shareholders makes CenturyLink a compelling
investment opportunity.
FOCUS ON EXECUTION
However powerful our assets, opportunities and
financial profile may be, we must also improve
our execution to deliver on our commitments. The
leadership and organizational changes we have made
Glen F. Post, III Chief Executive Officer and President