CenturyLink CEO Storey doesn’t expect a return to normal anytime soon for employees and customers

CenturyLink sign on building (free to use)
CenturyLink CEO and President Jeff Storey sees more opportunities ahead of his company to better serve SBMs and enterprises. (CenturyLink)

On Wednesday, CenturyLink CEO and President Jeff Storey said on the company's Q2 earnings call that he doesn't think things will return to pre-COVID 19 days, but there are now new opportunities.

Storey said about 75% of CenturyLink's employees are currently working from home while the remaining 25% are "working from work." According to the Seeking Alpha transcript, Storey said he told CenturyLink's employees not to expect to return to their offices before early fall. CenturyLink will take a phased approach to employees returning to their office spaces.

"Frankly, I don't expect we will ever return to the work from work approach we had prior to the pandemic," Storey said. "I don't expect to go back to the way it was, and I don't expect our customers to go back to the way it was, and I frankly think that's good for CenturyLink overall as we look to support our business and we look to support our customers."

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RELATED: CenturyLink CEO Storey: Future of work from home uncertain

Storey said CenturyLink has a "great opportunity" for serving small business customers, who were hit particularly hard by the coronavirus pandemic due to shutdowns.

"In the coming months, you will see us expand our efforts to grow our small business customer base, delivering a broader digital experience in our more than 170,000 fiber fed on net buildings," Storey said. "We know the opportunity with enterprise customers. We know the opportunity with our medium-sized customers. And I think there's a good opportunity with our small business customers.

"We're going to those customer segments with a broader digital experience and deeper digital experience for them. And so I think there is a good opportunity as we bring those things together and deliver for the customers."

Storey said Covid-19 accelerated CenturyLink's digital transformation, as well as the digital transformations of its customers.

During Q2, enterprise revenue increased 1.7% on a year over year basis compared to a decline of 1.8% in the second quarter of 2019. On a sequential basis, enterprise revenue grew about 1%. Small-to-medium business (SMB) revenue was down 6.1% year-over-year, primarily driven by continued declines in legacy voice services, compared to an average decline of 7.1% over the last four quarters. 

During the Q&A, Storey was asked what it would mean for CenturyLink if corporate office footprints started to shrink down and the impact for having data centers host more of the servers instead of having them located at the corporate headquarters.

"With respect to where do I think corporations are going? Well, they become more distributed work from home (with) fewer offices locations," he said. "I do think they will become more distributed. I do think that they will recognize that they need to locate their compute resources in different places. Some in the public cloud, some in private data centers, some in our edge compute facilities. But they'll do that based on the application and the performance that they are looking at out of that application and the network to provide it. So I do think it will become more widely distributed.

"What does that mean for our enterprise business? I think it means good things because our enterprise business is focused on making sure that we deliver network and network supported technologies to our customers to support that hybrid networking topology and making sure that we're matching our capabilities to the type of application they have."

CenturyLink's Q2 numbers

CenturyLink posted revenues of $5.19 billion in the second quarter compared to $5.58 billion a year ago. CenturyLink 's quarterly earnings of 42 cents per share beat Zack Consensus Estimates of 32 cents per share and last year's 34 cents per share.

Net income was up $6 million year over year to $377 million. Excluding some items and integration and transformation costs, net income rose from $369 million to $450 million.

Year-to-date, CenturyLink added more than 200,000 new homes passed to its fiber footprint and now has approximately 2.2 million homes addressable.

"During the quarter, we added 42,000 1-Gig and above customers, a record for us since we began expanding our fiber-to-the home efforts," Storey said.

Storey declined to comment on CenturyLink shedding some of its less profitable sectors, and also said he felt the company was under-valued by Wall Street.

With its transformation efforts, edge locations and fiber, Storey sees a window of opportunity ahead for CenturyLink.

"We think that there is a great opportunity for hybrid WAN," Storey said. "If it's not an SD-WAN solution, is not a VPN solution, it's a hybrid WAN solution and we're continuing to work with our customers to roll out those capabilities. A more distributed workforce, a more distributed operating environment, feeds into that hybrid WAN capability as well."

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