Level 3 forecasts a flat Q1, but sees Q4 services revenue jump

Level 3 Communications (NYSE: LVLT) reported that its Core Network Services (CNS) revenues continued to be a big factor in its Q4 2013 earnings, rising 4.1 percent year-over-year to $1.4 billion.

Similar to earlier quarters, Enterprise was the key revenue driver in the CNS division. Enterprise revenues rose 9 percent year-over-year to $939 million, up from $871 million in the same period a year ago. However, Wholesale declined 4 percent to $504 million.

For the year 2013, CNS revenues grew 2.9 percent to $5.6 billion due to a 6.8 percent rise in Enterprise CNS revenues. By comparison, 2012 CNS revenues were $5.5 billion.

From a regional basis, North America remains the leader, generating $1 billion in revenue, up 5 percent from $979 million in Q4 2012. While EMEA declined 4 percent to $223 million, Latin America rose 11 percent to $195 million.

From an overall financial perspective, Level 3 reported Q4 2013 revenue of $1.6 billion, down slightly from $1.61 billion in the same period a year ago.

"We had a strong finish to 2013 as our fourth quarter revenue benefited from both underlying growth and seasonal strength," said Jeff Storey, president and CEO of Level 3, in the earnings release. "Level 3's global network and differentiated customer experience continue to resonate with enterprises, leading to solid CNS enterprise growth of 6.8 percent for the full year 2013."

However, total revenue for 2013 also declined slightly to $6.31 billion, compared to $6.376 billion for the full year 2012.

The service provider also generated net income of $14 million and $0.06 per share for the fourth quarter 2013 vs. a $56 million and ($0.26) for Q4 2012.

Sunit Patel, executive vice president and CFO of Level 3, said in the earnings release that the company expects CNS revenue growth "to be higher than the 2.9 percent growth we saw for the full year 2013, on a constant currency basis."

However, Patel added that the company forecasts CNS revenue "to be roughly flat on a sequential basis, due to the typical reversal in seasonally strong fourth quarter revenue offset by continued underlying growth."

Shares of Level 3 were trading at $34.37, up $2.96 or 9.43 percent, in Wednesday morning trading on the New York Stock Exchange.

For more:
- see the earnings release

Earnings Summary: Wireline telecom earnings in the fourth quarter of 2013

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Level 3 expands Latin America fiber, Ethernet network to accommodate surging business growth
Level 3 expands CDN footprint in EMEA, Latin America, Asia

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