CenturyLink (NYSE: CTL) may feel confident about closing its merger with Qwest (NYSE: Q) by April 1, but in the near-term, the service provider's Q4 profit declined to $232.3 million from $286.7 million in Q4 2009 amidst slowing landline loss.
Company revenue, meanwhile, dropped to $1.72 billion from $1.84 billion in the same quarter last year, but beat analyst expectations of $1.71 billion.
Similar to Qwest, CenturyLink saw the usual voice line losses, but they were lower than previous quarters. For Q4 2010, CenturyLink's landline losses were down 12 percent compared to Q3 2010 and 15.8 percent compared to Q4 2009. The service provider's overall landline losses were 7.6 percent during 2010, with overall voice lines declining from just over 7 million to a little over 6.5 million.
Broadband, continued to grow as the service provider added 29,000 new DSL subscribers during the quarter. For the year, CenturyLink added 158,000 broadband subscribers, representing 7.1 percent annual subscriber growth. As of the end of 2010, CenturyLink had a total of 2,394,000 DSL customers.
Although the service provider continues to offer 25 Mbps speed offerings in various markets, its ultimate strategy is to use broadband as a vehicle for new services like its Prism IPTV service. Just this past week, CenturyLink launched the service in its Southern Nevada market to take on incumbent cable MSO Cox Communications.
Seeing continued growth in broadband, Glen Post, Chairman and CEO of CenturyLink, said that he believes the service provider's ongoing investment in broadband and emerging services such as IPTV will be its main growth engines going forward. "We expect strategic revenues to increase in the months ahead driven by continued growth in high-speed Internet subscribers, consumer demand for broadband services such as IPTV, and business customer demand for high-bandwidth data services and data transport services," he said in the earnings release.
But what's raising a red flag for Wall Street analysts is CenturyLink's 2011 outlook.
While CenturyLink's Q1 2011 forecast of $1.68 billion to $1.7 billion met analysts' forecasts of $1.69 billion, full year 2011 revenues are another story. For 2011, CenturyLink expects operating revenues to be four to five percent lower than 2010 operating revenues, as compared to the 6.5 percent decline in 2010 operating revenues compared to pro forma 2009 operating revenues.
This outlook comes as CenturyLink said it plans to increase capital spending by 16 percent in 2011 to $1 billion to target new fiber to the cell site opportunities. However, CenturyLink said its capital spending budget does not include any costs for integrating Qwest.
Separately, CenturyLink established an agreement with Verizon Wireless to resell its 3G and later 4G services to consumers in hopes to create a sticker consumer service bundle. Qwest already resells Verizon Wireless services to its customers.
For more:
- see the earnings release
- Reuters has this article
- see FierceTelecom's Q4 earnings summary
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