CenturyLink (NYSE: CTL) has seen declines in revenue in its wholesale business and a continuing drop in the number of voice access lines on the consumer side, but the telecommunications service provider expects to see improvement in its bottom line over the second half of the year, CFO Stewart Ewing told investors.
"On the business side, one area we've seen declines in is the wholesale business," Ewing said during a presentation at the Oppenheimer 18th Annual Technology, Internet & Communications Conference. "We expect that to get better in the second half of the year. [For example] we renegotiated a contract with one of our wireless providers with fiber to the tower. … [that] really stabilizes that revenue stream going forward and allows us to pick up more of their towers."
CenturyLink also adjusted prices with one of its carrier customers to better compete with incoming broadband providers in some of its operating areas, Ewing said. Those competitors are convincing CenturyLink business customers on legacy, lower-speed DS1 and DS3 connections to shift to their broadband service, something the provider wants to stem.
On the residential side CenturyLink is continuing to face competition from cable operators. With consumers demanding higher broadband speed and quality, the provider is working to meet that demand. "We're seeing our customers use more and more video," Ewing said. He noted that the average CenturyLink broadband subscriber uses about 79 GB per month, up 70 percent from a year ago. With heavy users chalking up 200 GB per month or more, CenturyLink is considering a tiered pricing structure, "in the long term," to handle the costs of higher capacity needed to meet heavy user demand.
CenturyLink is implementing some cost-cutting measures to shore up its financials, including the pending layoffs of 1,000 full-time employees as well as many contract employees. It also made adjustments to its wholesale unit, renegotiating contracts with the service providers with whom it does business.
Ewing also noted that CenturyLink has made some changes to its sales force, rebuilding the "pursuit team" it inherited from Savvis following its acquisition of that company in order to pursue more large-scale business sales.
"We believe if we can execute [well] … we're basically working with our salespeople to get good execution on the sale side; we're hoping to see sequential growth that will give us some momentum going into 2016," Ewing said.
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