CenturyLink Q3: Doubles operating revenues, increases broadband subscribers

CenturyLink's (NYSE: CTL) plan to transform itself from a small town landline telco and into a major national and international player via acquisitions showed signs of paying off in Q3 2011 as operating revenues more than doubled to $10.7 billion from $5.3 billion for the same period in 2010.

In the past three years, CenturyLink spent $38 billion to acquire not only Embarq and Qwest, two acquisitions that expanded its national and international network reach, but also Savvis, which gave it a suite of new managed and data center service capabilities.

However, company net income, excluding special items, was $718 million in the first nine months of 2011 compared to $797 million in the first nine months of 2010.

Here's a breakdown of CenturyLink's key operating metrics:

  • Regional Markets Group: While it saw typical landline voice losses, CenturyLink was able to narrow them by 20 percent compared to pro forma Q3 2010 and more than 15 percent over Q2 2011. As of the end of September, CenturyLink had 14.8 million access lines, down from over 15 million at the end of Q2 2011. Broadband, however, was a different story. During the quarter, CenturyLink added about 57,000 new broadband customers. While it does not break out specific numbers about its IPTV service, the service provider reported that it saw about 70 percent of its Prism TV customers subscribing to a triple play voice, video and data bundle.
  • Business Markets Group: Seeing an ongoing move to next-gen services, BMG's strategic revenues were $443 million in the quarter, up 2.1 percent over pro forma Q3 2010. However, total BMG revenues of $927 million were down 5.1 percent from pro forma Q3 2010 due to declines legacy services and data integration revenues, which more than offset growth in CenturyLink's high-bandwidth broadband offerings.
  • Wholesale Markets Group: Driven by new wireless backhaul and Ethernet sales, WMG strategic revenues were $573 million in the quarter, a 9.1 percent increase over pro forma Q3 2010. Like BMG, ongoing declines in legacy service revenue drove down WMG's total revenue 3.2 percent on a year-over-year basis to $979 million in total revenues. During Q3, CenturyLink made concerted progress with its Fiber to the tower initiative, adding almost 1,000 fiber builds, ending the quarter with nearly 8,900 fiber-connected towers and with plans to complete approximately 900 additional sites by the end of the year.
  • Savvis: Ongoing demand for managed hosting and cloud services drove up Savvis' operating revenues to $223 million for the period between closing the merger on July 15 and Sept. 30, 2011. Savvis also continued to expand its data center footprint, adding space in two cities in Q3, with plans to expand into three new cities in Q4 2011. By the end of the year, Savvis expects to have about two million in total data center floor space.

But what's got investors excited about CenturyLink is its Q4 outlook. The service provider has forecast total revenues of $4.60 to $4.65 billion and operating cash flow of $1.87 to $1.92 billion.

For more:
- see the release
- Bloomberg has this article

Earnings summary: Wireline in the third quarter 2011

Related articles:
FCC's new USF Connect America fund draws different reactions
CenturyLink's Glen Post to serve on White House telecom security panel
CenturyLink makes good on Qwest acquisition provision with $10 broadband service
Savvis to expand data center reach to support more cloud, managed services
CenturyLink hints at expanding IPTV into Qwest markets, delivering SMB-based cloud services