CenturyLink's Post: Level 3 deal will complement our FTTP, copper-based broadband builds

Glen F. Post
CenturyLink CEO Glen Post. Image: CenturyLink

CenturyLink said that its pending deal for Level 3 won’t have any impact on its ongoing last-mile fiber-to-the-premises (FTTP) and copper buildouts to small businesses and residential customers.

Speaking to investors during its third quarter earnings call, Glen Post, CEO of CenturyLink, said that the acquisition of Level 3 will actually complement its last mile network.

RELATED: Tracking wireline telecom earnings in Q3 2016

“This deal will not really impact us in a negative way at all,” Post said. “I think if anything it enhances our ability to bring very high speed products and services to our consumer and SMB customers.”

Previously, the telco laid out an ambitious broadband expansion strategy that will leverage a mix of vectoring and FTTH technologies.

By 2019, CenturyLink will equip its 25 top markets with over 90 percent of homes and businesses passed with 40 Mbps or higher service, while over 70 percent would have 100 Mbps. Finally, over 20 percent of its homes will be passed with GPON to enable 1 Gbps or more.

Here’s a breakdown of CenturyLink’s key third quarter segment results:

Business: The business segment was a bit of a mixed bag. Revenues were $2.61 billion, down 1.1 percent from third quarter 2015, primarily due to a decline in legacy revenues, which was partially offset by a 6 percent growth in high-bandwidth data revenues. Strategic revenues were $1.23 billion in the quarter, an increase of 5.1 percent from third quarter 2015.

Consumer: Revenues were $1.47 billion, down 2.5 percent year-over-year, a factor CenturyLink attributed to decline in legacy voice revenues. The legacy voice revenue losses were partially offset by growth in broadband and Prism TV revenues.

CenturyLink ended the quarter with a total of 318,000 Prism TV subscribers, up year-over-year from 269,000. Strategic revenues were $789 million in the quarter, a 3.4 percent increase over third quarter 2015. Total broadband subscribers were 5.95 million, down from 6.07 million in the same period a year ago.

From an overall financial perspective, CenturyLink reported third quarter core revenues of about $3.9 billion.

The telco’s third quarter net income and diluted earnings per share (EPS) was $152 million and 28 cents, respectively, down year-over-year from $205 million and 37 cents. Net income was lower due to the decline in operating income along with a loss reported in other income associated with the early retirement of debt

CenturyLink said it expects continued growth in strategic revenues to be offset by anticipated declines in legacy revenues and data integration revenues, resulting in lower fourth quarter 2016 operating revenues compared to third quarter 2016.

The telco has forecast operating revenues for the fourth quarter to be between $4.28 to $4.34 billion and core revenues to be $3.86 to $3.92 billion.

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