Level 3's Storey: Enterprise business growth continues despite economic headwinds

Jeff Storey, president and CEO of Level 3 Communications (NYSE: LVLT), acknowledged that while the economy continues to be challenging, it's not curtailing the company's enterprise service growth.

level 3 jeff storey


"We don't think it has a huge impact on us," Storey said at the Citi 2014 Global Internet, Media and Telecommunications Conference. "We have been very successful in growing our enterprise business regardless of the macro-economic environment."

Story added that the company has "good products that are meeting the needs of the changing enterprise market, and as that market evolves towards the products and services that we offer, those transitions will occur whether the overall economic environment is good or weak."

While Level 3 won't release its fourth quarter earnings until Feb. 5, in Q3 2013 the company's enterprise services segment, including its EMEA UK Government unit, grew 7.4 percent year-over-year and 3.1 percent sequentially to $905 million.

Part of this success can be attributed to the fact that Level 3 has been increasing its focus on the enterprise services market in recent years. The service provider has been expanding the amount of buildings connected to its fiber network and its product set. In the U.S. alone, Level 3 said there are 100,000 buildings near 500 feet of its fiber network.

Moreover, the company said security is a growing service opportunity.

Running one of the country's largest Internet backbones, Level 3 has a broad view into various traffic types and can apply this knowledge to its enterprise customer base. Under the company's Cyber Security Solutions banner, it can offer business customers a suite of managed security, DDoS mitigation and security consulting services.

"Level 3 operates one of the world's largest Internet backbones and as a result we do deep packet inspection and we see traffic at levels that nobody else in the world can see," said Storey. "We want to leverage that capability to help our enterprise customers deal with the threats that are out there on the Internet."

Level 3 is also bringing its content distribution network (CDN) and domain name system (DNS) translation services to enterprise customers. 

"If you take those three infrastructures and step back, it gives us the situational awareness of the threat landscape that enterprises face," Storey said. "We need to make sure that we continue to leverage that capability and deliver that as a new service for our enterprise customers."

In addition to security, Level 3 continues to win contracts to manage large-scale enterprise networks. It struck its biggest coup last year when it unseated AT&T (NYSE: T) in July as the primary backbone provider for Starbucks' Wi-Fi network.

"Our Starbucks deal we announced earlier in 2013 is exactly that," Story said. "It is us leveraging our ability to do wide-scale deployment and operations of networks for customers and really build that capability for enterprises."

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