CenturyLink, Level 3, Moving Closer to Merging, Report Declining Profit for Q2

CenturyLink and Level 3 Communications, which are in the process of merging, Wednesday released their second-quarter financials, with each reporting profit decreases compared to the same quarter in 2016.

CenturyLink reported $17 million in profit compared to $196 million for the year ago quarter. The decrease was due primarily to a decline in operating income, with about $115 million from one-time charges related to the sale of its colocation business.

Its total operating revenues in the second quarter were $4.1 billion compared to $4.4 billion for the same quarter last year.

“We are confident our continued investment in high-quality, high-bandwidth broadband network infrastructure positions CenturyLink well for long-term growth,” said Glen Post III, CenturyLink’s president and CEO. “Enterprise demand for high-bandwidth data services remains strong and, while consumer broadband units were weaker than expected, we are encouraged by the higher-value customers our improved offerings are attracting. We accelerated our capital investment in high-bandwidth services and broadband infrastructure during the second quarter, which we believe better positions us to increase revenues in the second half of 2017 and beyond.”

Level 3 reported $154 million in profit, down from $156 million for the year ago quarter. Overall revenue totaled $2 billion, on par with the year ago quarter.

“Level 3 continues to focus on delivering profitable growth and expanding margins,” said Jeff Storey, Level 3’s president and CEO. “With the CenturyLink team, we have gained good traction on integration planning. I am excited to become part of the combined company management team when the transaction closes, as I believe the combination with CenturyLink will enable us to deliver significant value to our stockholders, customers and employees.”

CenturyLink’s acquisition of Level 3 is anticipated to be completed by Sept. 30.

“We continue to make good progress in obtaining the necessary approvals for the pending Level 3 acquisition, having received clearance in 23 of 25 required states and territories,” Post said.

CenturyLink’s enterprise segment revenues were $2.22 billion in the second quarter, down 9 percent from the year ago quarter, primarily due to the revenue reduction associated with the colocation sale, as well as the decline in legacy revenues. Enterprise strategic revenues grew 4 percent and high-bandwidth data services revenues increased 5 percent year-over-year

Consumer segment revenues were $1.4 billion, down 6.2 percent from the year ago quarter, primarily due to a decline in legacy voice revenues, as well as lower broadband and video revenues driven by increased cable competition and the impact of the restructuring of a satellite video contract in first quarter.

Level 3’s core network services (CNS) revenue in the second quarter totaled $1.6 billion in North America and $1.96 billion globally, compared to $1.6 billion and $1.95 billion for the year ago quarter.

Enterprise CNS revenue totaled $1.46 billion globally compared to $1.41 billion for the year ago quarter. Wholesale CNS revenue totaled $506 million globally compared to $541 million.