Level 3's Q1 revenue dips to $1.58 billion on expected government contract disconnects

Level 3 Communications' (NYSE: LVLT) first-quarter revenues declined sequentially and year-over-year to $1.58 billion due to the expected termination of various North America and UK government contracts.

During the first quarter, the company's net loss was $0.36 per share, including $0.11 in foreign exchange losses in EMEA and Latin America.

"In the first quarter, we saw the effects of the near-term revenue pressures we cited last quarter, due to the typical reversal in seasonally strong fourth quarter revenue and some known contract disconnects in North America and UK Government," said Sunit Patel, CFO of Level 3.

Despite these initial revenue challenges, Level 3's total Enterprise Core Network Services (CNS) revenue grew 2.2 percent year-over-year to $1.37 billion. Taking out the impact of UK government revenue, Enterprise CNS revenue grew 6.8 percent year-over year. Wholesale revenue, meanwhile, declined to $501 million, while wholesale voice and other revenue declined to $205 million.

In addition, Patel said that "our gross margin is now back above 60 percent for the first time since acquiring Global Crossing."

On a regional basis, North America was the clear leader with $967 million in revenue, while EMEA and Latin America posted revenues of $223 and $182 million, respectively.

Reiterating the guidance it provided in its Q4 2012 earnings call, Level 3 said that for the remainder of 2013 they expect sequential CNS revenue growth to be stronger compared to 2012.

Shares of Level 3 were listed at $20.59, up 0.32, or 1.58 percent in late morning trading Thursday on the New York Stock Exchange.

For more:
- see the earnings release

Earnings roundup: Wireline telecom earnings in the first quarter of 2013

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