CenturyLink plans to lay off nearly 8 percent of its workforce, or 3,500 people, by the end of the year as it looks to stem the bleeding from declines in its legacy telephony business line.
Similar to fellow telcos AT&T and Verizon, CenturyLink continually faces growing pains as it replaces declining legacy revenues with next-gen IP-based broadband and video services.
"We all understand the pressure caused by the decline in our legacy revenues -- it creates a $600 million negative impact on our business each year,” CEO Glen Post said in a memo obtained by USA Today. “While we continue to see positive growth in our strategic products, the profit margins of these strategic products and services are considerably lower than those associated with the legacy revenue we are losing.”
Post added that "while I am very confident that we will continue to accelerate our revenue growth over time, I also have reached the very difficult conclusion that the loss of higher margin legacy revenue requires that, in addition to achieving our growth targets, we must also significantly realign our fundamental cost structure.”
CenturyLink spokeswoman Annmarie Sartor told USA Today that the service provider will offer voluntary departures before conducting involuntary job cuts.
The telco certainly saw the effects of legacy declines in the second quarter as total operating revenues for the quarter were $4.4 billion, down year-over-year from $4.42 billion in second quarter 2015.
These trends were clearly reflected in its consumer and business segments.
In the consumer segment, revenues declined 0.6 percent to $1.49 billion. CenturyLink said the decline was due to a drop in legacy voice revenues, which was partially offset by growth in broadband and Prism TV revenues. Strategic revenues were $800 million in the quarter, up 5.5 percent year-over-year.
Likewise, business revenues were $2.6 billion, down 2.3 percent from the second quarter 2015 due to a decline in legacy revenues, which was partially offset by 8 percent growth in high-bandwidth data revenues.
- USA Today has this article
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