CenturyLink reported positive results for the fourth quarter of 2017, following its acquisition of Level 3 Communications last year.
Consolidated revenue for the fourth quarter, which includes two months of Level 3’s financial performance, was $5.32 billion up 24 percent year over year from $4.28 billion, boosted by strong business segment results. For the full year revenue rose 1 percent to $17.66 billion. Pro forma consolidated revenue was flat at $6 billion.
The company also recognized a $1.1 billion tax benefit from the new tax law.
“2017 was a year of significant transformation for CenturyLink. The sale of our data centers and colocation business followed by the acquisition of Level 3 Communications positions CenturyLink as a leading global networking company,” Glen Post, CenturyLink CEO, said in a statement. “This strategic combination brings significant scale, enhances our products and services portfolio, and improves our long-term financial flexibility.”
On Wednesday’s earnings call Post said, “Over the last several years, we have positioned CenturyLink from a legacy-focused telco with limited prospects for growth to a fiber-focused provider of advanced data services and global network and customer base.”
Business revenues for the fourth quarter were $3.73 billion, while consumer revenue for the quarter was down 5.6 percent to $1.4 billion. CenturyLink reported a net loss of about 90,000 broadband subscribers for the quarter as it continued to lose lower-speed tier customers. The figure includes losses of about 140,000 customers who subscribed to speeds under 20 Mbps and gains of about 50,000 customers buying higher-speed offerings, CenturyLink EVP and CFO Sunit Patel said on the earnings call.
Jeffrey Storey, CenturyLink president and COO, said that the company has a significant number of homes enabled with speeds between 100 Mbps and 1 Gbps and noted that while most customers don’t see the need for or use more than 40 Mbps, “we know we are more successful in selling when they have an upgrade path for the future.”
From a consumer broadband perspective, CenturyLink needs to focus on its selling higher-speed offerings within its footprint, as it has the opportunities to sell very high speeds of 100 Mbps and above, Jeffrey Storey said on the earnings call. To do so the company plans to continue to deploy more fiber into its network, bringing it ever closer to consumers.
“And then we have the benefit of being able to spread that fiber deployment across not only our consumer customers, but our small and medium enterprise customers, our larger enterprise customers, passing more buildings and going into more buildings,” Storey said. “And so we believe fiber is good and we’ll continue to build back closer and closer to customers.”
The company will also continue to focus on its Price for Life pricing for broadband, which started in September, and now has more than 1 million customers subscribing to it. “It’s [Price for Life offering] been very successful.” Storey said previous discount promotions that ended after six months were “not very customer-friendly” as people saw it as a rate increase when the discount ended.
When it comes to wireline enterprise services, Storey said MPLS is still an important product for CenturyLink, but the company is also “very excited” about technologies like SD-WAN.
He noted customers’ networking challenges are not solved by a one-size-fits-all product and CenturyLink sells based on what makes sense for each customer. “I don’t think it’s an either or between SD-WAN and MPLS,” Storey said. “I think it’s both.”