CenturyLink's CEO: Despite challenges, fiber network will win the day

fiber technician CenturyLink
At an investor conference, CenturyLink CEO Jeff Storey says is company is well positioned going forward due to its fiber network. (CenturyLink)

Like most telcos, there are challenges ahead for CenturyLink, but one area it can bank on is its fiber network both here and abroad.

Speaking at the 2019 Goldman Sachs 28th Annual Communacopia Conference in New York on Wednesday, CenturyLink CEO Jeff Storey said despite declining revenues from legacy services and products, his company is well positioned thanks to its fiber networks.

CenturyLink's fiber network is in the catbird seat due to the continued need for more bandwidth capacity, the need for higher levels of security and the management of applications and services in the cloud instead of the network, according to Storey.

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Storey said all of those trends are moving in CenturyLink's direction.

"Do we have the ability to meet that market demand? I believe that CenturyLink has the world's best fiber network and certainly in the U.S.," he said. "You combine that with our subsea connectivity, our MEA, LATAM (regions), I think it's the world's best, but certainly in the U.S. I believe we have the world's best fiber infrastructure and the ability to scale and grow it at a pace that other people can't match."

As the prior CEO of both Level 3 and WilTel Communications, Storey had an indirect hand in CenturyLink's fiber fortunes prior to both of those companies being bought by CenturyLink.

Storey said WilTel, Level 3, Qwest, and Broadwing, among other deals by CenturyLink, all had multi-conduit strategies prior to being bought by CenturyLink. Level 3 built its network with 12 fiber conduits, of which there are two or three still available today, according to Storey.

RELATED: CenturyLink extends fiber reach in U.S., Europe

In July, CenturyLink announced it would deploy 4.7 million more miles of fiber across the company's intercity networks in the U.S. and Europe. The first phase of the fiber overbuild was completed in June with more than 50 cities across the U.S. connected with fiber.

"A few months ago we announced we were building an overlay ultra low loss network that is really important for our dark fiber customers, our hyperscale customers, and it's important for our ability to scale capacity," Storey said. "We announced that after most of the North American network was already done. We have the ability to do it very, very quickly and rapidly."

In the company's second quarter earnings call in August, Storey said CenturyLink added 5,000 new fiber-fed buildings in the second quarter, compared to 4,500 in the first quarter. By contrast, Level 3 used to add around 500 fiber buildings per quarter.

While fiber is a bright spot for CenturyLink, Storey said that CenturyLink needed to work on its execution and improving the customer experience. With the integration of Level 3 complete, Storey said CenturyLink is working with its sales teams to simplify its product offerings.

At one point, CenturyLink had 40 product offerings for small-to-medium businesses (SMB), but Storey said that number needs to go to four or five product offerings to help streamline the go-to-market strategy fpr the sales teams. Outside of the traditional CenturyLink footprint, the SMB sector represents an opportunity for CenturyLink because Level 3 didn't sell into that market, Storey said.

In regards to its product portfolio Storey said it wasn't just SD-WAN, MPLS or managed services, but the overall product portfolio that CenturyLink can offer its customers.

Other highlights from the call included:

• Storey acknowledged that both T-Mobile and Sprint were fiber customers of CenturyLink, but whether the merger goes through or not, he expects CenturyLink to still have role as those two companies, as well as other telcos, build out their 5G offerings.

• CenturyLink is working to reduce the number of third-party agreements it has. Storey said in addition to the cost savings of not using third-parties, CenturyLink can provide a better customer experience on its own network.

• Storey said CenturyLink is seeking to limit its investment in DSL vectoring and copper bonding by instead investing in fiber to more buildings. CenturyLink lost 56,000 broadband customers in the second quarter, mainly due to slower broadband speeds.

• While CenturyLink has done a great job, according to Storey, of growing its broadband services, video didn't provide the linkage that CenturyLink was looking for because subscribers are no longer attracted to triple play services.

• CenturyLink has hired advisors as it mulls selling off assets, such as its consumer division or part of its commercial services, to generate cash flow. Storey said CenturyLink is keeping an open mind, but it will be a long process before a decision is made.

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