Key Business Services Help Offset CenturyLinks Legacy Declines

Communications giant CenturyLink this week reported that profit rose 2.6 percent – to $239 million – in the fourth quarter of 2014, but a decline in legacy services contributed to the company’s sixth consecutive quarter of falling revenue.

After the earnings news released, the company’s stock price slipped about 5 percent on Thursday, but has since regained half of that, rising to $39.49 per share as of 12:20 p.m. ET on Friday.

CenturyLink and other traditional telecommunications providers have begun to rely more and more on the direct and indirect sale of business services in order to make up for the losses in legacy-service revenue. And while last quarter wasn’t particularly strong for CenturyLink’s business segment, strategic business revenue was up slightly (0.4 percent) on the strength of high-bandwidth offerings such as MPLS, Ethernet and wavelength services.

Data services grew 13 percent over the same period a year ago. Managed-hosting revenue rose 1.4 percent. Colocation sales grew nearly 2 percent.

Lower legacy, private-line and data-integration sales led to a 3.6 percent decline in business revenue overall ($2.7 billion).

“As we look to 2015, we anticipate stronger revenue generation in the second half of the year and expect to reach revenue stability for the full year,” said Glen F. Post III, chief executive officer and president of CenturyLink. “We believe revenue growth will benefit from strategic product expansion and our recently implemented organizational realignment. This realignment has strengthened our focus on sales and revenue generation as we have combined and expanded our network and managed hosting/cloud sales forces, while enhancing our product portfolio to support strategic revenue growth in the months ahead.”

CenturyLink relies on a bevy of channel partners to sell its business services. At its Channel Alliance event last month, channel chief Blake Wetzel encouraged traditional telecom agents to find their niche in a sales environment that’s increasingly leaning toward IT.

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