tw telecom, which is being acquired by Level 3 Communications, reported that second-quarter 2014 revenues rose 7.8 percent to $419.7 million on strong enterprise and data and Internet segment growth.
During the quarter, the service provider's enterprise revenue grew 8.7 percent year-over-year to $25.6 million, while data and Internet revenue 3.8 percent sequentially and 15 percent year-over-year.
Growth in data and Internet services revenue was primarily driven by an increase in strategic Ethernet and VPN-based products, Internet and other services, partially offset by churn and re-pricing. Data and Internet revenue represents 60 percent of total revenue for the quarter, up from 56 percent during the same period a year ago.
Voice service revenues were also up 0.7 percent due to what tw telecom says was an increase in converged solutions and usage-based services, partially offset by churn.
Finally, network service revenues declined 11.6 percent, a factor the company said is related to the impact of churn and re-pricing from large carrier customers. Network service revenues now represent 14 percent of revenue, down from 17 percent in the same period a year ago, which reflects the transition to Ethernet-based technologies.
Despite the Level 3 deal, tw telecom is continuing to make progress with its market expansion plan. Recent expansion targets include Houston, Kansas City, Las Vegas, Nashville, Memphis and Orange County, Salt Lake City and Richmond, Va. Upon completion, these network builds will broaden its local on-net network presence, one of the key factors why Level 3 proposed purchasing tw telecom.
The service provider ended the quarter with about 34,000 fiber route miles, the majority of which it said were metro miles.
Larissa Herda, CEO and chairwoman of tw telecom, said in the earnings release that the focus between now and the closing of the merger is to "continue to execute on our financial and operational goals."
The company generated net income of $11.1 million, or 8 cents basic earnings per share (EPS), or $13.5 million of net income, or 10 cents basic EPS excluding costs related to its pending merger with Level 3.
Shares of tw telecom closed at $41.77, down 56 cents or 1.32 percent, at the end of Wednesday trading on the Nasdaq stock exchange.
- see the earnings release
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