Level 3 says it has advantage over AT&T, Verizon in the enterprise market

Level 3 Communications' EVP and CFO, Sunit Patel, maintains that as AT&T (NYSE: T) and Verizon (NYSE: VZ) focus more of their attention on wireless and entertainment, the company will benefit as it pursues new growth opportunities in the enterprise services space.

Speaking to investors during the second-quarter 2015 earnings call, Patel said AT&T and Verizon's shift to wireless combined with its own movement into larger enterprise accounts will produce positive results over time.

"We think it will continue to benefit us as they continue to put in more and more capital to wireless and consumer so over time it should benefit us," Patel said. "If you look at our enterprise performance for the last handful of years it shows this gap where we are focused on the wireline business where in AT&T's case they are increasingly driving more into wireless, consumer and entertainment in Mexico."

Patel added it should "continue to benefit us over time."

One area where Level 3 is becoming a bigger threat to AT&T and Verizon is Ethernet. While AT&T remains the top Ethernet provider in terms of port share sold, Level 3 surpassed Verizon for the first time, according to Vertical Systems Group's 2014 year-end Ethernet Leaderboard.

A key contributor to Level 3's growth in Ethernet was its acquisition of tw telecom, a deal that immediately expanded its on-net fiber building footprint. tw telecom brought nearly 21,000 buildings connected to its fiber network to Level 3.

Once again Core Network Services was the key revenue driver in Level 3's second-quarter revenue mix, rising to $1.94 billion, up from $1.8 billion in the same period a year ago. However, Wholesale Voice Services and other revenue were $120 million, down from $144 million in the second-quarter of 2014.  

On a regional basis, North America led Level 3's CNS revenue at $1.6 billion with gains in both the wholesale and enterprise segments. Wholesale revenue was $450 million, while Enterprise rose to $1.1 billion.

Meanwhile, EMEA and Latin America revenues both declined year-over-year. EMEA revenue was $204 million and Latin America was $186 million, down from $231 and $201 million in the second-quarter 2014.

From an overall financial perspective, total company second-quarter revenue was $2.06 billion, up year-over-year from $2.03 billion on a pro forma basis.

Level 3 reported a quarterly loss of $13 million, or four cents a share, compared with a year-earlier profit of $51 million, or 21 cents a share. 

During the quarter, the service provider generated net income of $150 million and basic earnings per share of $0.42, which excludes a loss on the extinguishment and modification of debt, related to refinancing transactions completed during the quarter. The company said that loss was approximately $163 million or $0.46 per share. Including this loss, basic and diluted earnings per share were ($0.04).

Shares of Level 3 were listed at $51.00, down $1.50, or 2.86 percent in Wednesday morning trading on the New York Stock Exchange.

For more:
- see the earnings release
- WSJ has this article

Special report: Wireline telecom earnings in the second quarter of 2015

Related articles:
Level 3's Storey: SDN/NFV allow us to better control the customer experience
Level 3 acquires Black Lotus, enhances DDoS mitigation capabilities
Level 3, Zayo fiber cuts in Northern Calif. come under FBI investigation
Level 3 fiber network outage disrupts Internet traffic in the U.S. and Europe

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