Verizon Communications (NYSE:VZ) recently reported its first quarter earnings and discussed the following topics in its earnings conference call.
Jason Armstrong – Goldman Sachs: Fran, maybe a couple questions. First on Wireless, a very good margin result this quarter. I guess when we think about the prior guide you had given, 49% to 50% margins for the year, I think a lot of people sort of worry that we’ll have good margins in the first three quarters of the year only to give a lot of it back in the fourth quarter. I guess related to this, last week you announced the intention that the length in the handset upgrade cycle to 24 months. A couple questions, A, was that contemplated in this guidance, and then B, just given the timing of that which I think kicks in September, do you think that sort of de-risks the fourth quarter relative to the historical experience? And then a second question I guess I’ll take a crack at the Vodafone question. There has been obviously a lot more noise recently on the future of that relationship, and I’m just wondering is this the press and the analyst community really getting ahead of themselves or has there been some sort of change related to the partners’ desire and urgency to find a resolution?
Francis J. Shammo – EVP and CFO: So, look, on the 49% to 50%, if you recall back to what I’ve said in the first quarter is, we said that we expected Verizon Wireless, too, for the full year to be within the range of 49% to 50%. Obviously, when I do something like that, I understand exactly what’s on our plate of strategy for the year, and that we had said before that we look at all of our policies and procedures on a normal basis, and this was one of those policies that we knew we were going to change. As you said, Jason, it’s going to become effective September 1 and, in essence, what it does it lessens our upgrade cycle from the minus four months from contract equal to the contract. So full 24 months to be eligible for that upgrade. So I think that’s all factored in with what I have said coming into this year and that’s why I was confident with the 49% to 50% on the full year basis. Then with respect to Vodafone, obviously, we made a public announcement on April 2 and I would reference all of you back to that announcement. Of course, we’ve always said before, we’re very interested in acquiring the 45% stake in Verizon Wireless that we don’t already own. I will say though that there has been a lot of speculation about the tax consequences of a purchase of this 45%, and we are extremely confident that such a transaction could be accomplished in a manner that is very tax efficient and would not result in a tax on the gain in that stake. So beyond that Jason, I don’t think there is really much else to say. So with that I’ll pass it on to the next question.
Enterprise Side Details
Simon Flannery – Morgan Stanley: Fran, there’s couple of quick things on the Enterprise. Just any impact or comments on sequestration? Is that having any material impact on some of the comments you made about cautious spending? Then on to quad-play, we’ve seen both in Europe and also with some of the comments out of DISH this week around focusing on bundling Wireless with video and with other Wireline products. You talk a lot about your triple-play. You have the Cable JV. Can you just give us your broader thoughts on bundling Wireless more closely with some of the FiOS and another products either now or down the road?
Francis J. Shammo – EVP and CFO: Sure, Simon. So, on the Enterprise side of the house, I mean, obviously, we’re seeing a lot of issues around Enterprise. I think the sequestering has probably hit the more of the government and state side of the house than it has the overall Enterprise side of the house. But on a much broader perspective around Enterprise, obviously, we believe that our platforms are there; we’re having good growth in the areas of our cloud and our network strategies are – security is still growing at a good pace. But obviously, the voice and the data continue to offset this, and I don’t really see a change there, given the fact that we really have not seen a consistent and steady economic growth profile. We have not seen a consistent and steady employment rate. I still think there’s some uncertainty out there around what’s going to happen with tax reform. So, again, I believe that the most companies are still in this cost-cutting mode really not investing but trying to get there P&L squared away. So, until the overall macroeconomics change, I think we’re going to be in this situation at least for the near-term here. On the quad-play, obviously, we believe that the quad-play is extremely important. That’s why we entered into the Cable agreement that we did a year ago with the cross-selling agreements and also with the joint innovation that we have agreed to do. Because I think that the this is very important because as we look at how do we innovate and bring content in and outside of the home on a seamless perspective. This is where that all comes into play and I think this is just again supported what we knew a year ago, which was this strategy is the right strategy. The other thing I’ll say is that with this it also supports the fact that you have a foreign investor who wants to come into the North American Wireless footprint; you have a domestic investor who wants to gain share in the Wireless footprint. This again just confirms our overall belief that the wireless industry still has a lot of growth left in it both on the quad-play and all with the innovation of machine-to-machine and 4G LTE. So I think that’s where we sit with the quad-play.