TWTC

tw telecom inc. (TWTC)

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TW Telecom Inc (TWTC)

JPMorgan Global Technology, Media and Telecom Conference Call

May 14, 2013 03:30 pm ET

Executives

Mark A. Peters – Executive Vice President and Chief Financial Officer

Michael A. Rouleau – Senior Vice President of Business Development and Strategy

John T. Blount – Chief Operating Officer

Analysts

Phil A. Cusick – JPMorgan Securities LLC

Presentation

Phil A. Cusick – JPMorgan Securities LLC

All right, let’s get started. My name is Phil Cusick. I cover Telecom and Cable here at JPMorgan. Joined today by John Blount, COO; Mark Peters, CFO and Michael Rouleau, the SVP of Business Development and Strategy. I won’t read the whole bio of Tamura Telecom. Thanks for coming guys. I thought it made sense to just make a couple of quick introductory remarks. Mike is going to do that and then we will jump into Q&A. Thanks.

Mark A. Peters

Okay, I’ll start with my safe harbor statement if you don’t mind. So before we start, I’d like to refer you to that Safe Harbor statement, information in this meeting, webcast contains statements about expected future plans and expectations that are forward-looking and are subject to risks and uncertainties. A discussion of risk factors that may cause our results to differ materially from our expectations included in our 2012 Form 10-K, especially with the (inaudible) titled the risk factors. Mike?

Michael A. Rouleau

Sure, so just by the way a background if you’re not familiar with who we are. TW Telecom is a competitive service provider. A national footprint across the United States, we focus on medium and large enterprise business. We don’t do anything residential and we do that across 75 different markets around the U.S., where we own and operate our own fiber network infrastructure. We of course have domestic ubiquity where we can deliver services just by anywhere for customer. But we focus on those markets where we have a fiber footprint. We go into a market and build a pretty big fiber infrastructure, well outside of just the central business district where mostly the competitors go.

We extend out into the business products, into the suburban areas where the businesses are and focused on delivering that fiber capability, so today we have about 18,500 buildings connected with our fiber, and that includes about 400 third party data centers, so when you think about company’s like Equinix or Core Side or digital reality trust, we are in a lot of those locations.

And so our focus is on, how do we build that fiber infrastructure connect customers, headquarters, regional offices, their data centers, these third party data centers and give them very scalable capability upwards of 10 gig and a wide range of products and services from Ethernet to IP VPN, Internet Access, voice complete portfolio of services for the enterprise customer.

Phil A. Cusick – JPMorgan Securities LLC

Good, thank you. So let’s start with an update on the business, it seems like the Company continues to execute, but the large numbers might be catching up with you a little bit. You’ve talked about investing in your sales force really start to reaccelerate that business, but that that could drag margins a little bit in the near-term. Can you expand on that a little bit Mark?

Mark A. Peters

Sure. So this year we’ve been talking about four primary growth initiatives that we’re focused on in order to accelerate our sales growth, and then ultimately our revenue growth. And those four areas are expanding our sales reach, primarily through increasing our direct sales force. We can talk about that. It’s also to expand doing the market expansions, continuing within our existing markets to continue to build out our network, our fiber network that Mike spoke as to pass more buildings, to reach more customers.

We’re also doing a lot of work on our products and enhancing our product portfolio, our existing one as well as inventing in real leading EDGE type of capabilities that we can talk about as well. And then efficiencies, both the efficiencies and how we interact with our customers make it faster, better, easier experience for them and buying services from us and that complements us very much integrated with how we internally deliver those services to our customers, so we are much more efficient internally than we even are today and it’s highly stable one.

So those are the areas that we are investing in this year in particular to accelerate that growth rate. So that we expect to pressure the margins this year because we are expanding our sales force and we are adding headcount to the product development and do the product introduction and the product launches and everything that goes with that as well as when we're bringing the new sales folks on board, enabling them to be successful as fast as we possibly can, so all of those go together that we expect as we invest in all of those growth initiatives, we expect this years even margin to be pressured.

Phil A. Cusick – JPMorgan Securities LLC

So let’s talk first about sort of the on boarding process, who are you looking to hire, is it experienced enterprise sales people, are you looking for more sort of new people of the business?

Mark A. Peters

Sure, we have somewhat unique philosophy when it comes to hiring sales people. We’ve never been a Company who just add sales people for the shake of adding more numbers to see how they perform, and to see how many of them will stick. So as we look to add sales people we’re really looking to add them where we have see the most opportunity in the marketplace. So, every sales person we bring into the Company we’re bringing into go after specific opportunity.

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