Level 3 Builds on Turnaround as Profit Jumps 9%

After swimming in losses for years, channel stalwart Level 3 Communications now has strung together several consecutive quarters of profit.

The service provider announced on Wednesday that first-quarter profit rose nearly 9 percent, to $122 million. That was up from $112 million in the first quarter of 2014. Revenue was slightly more than $2 billion, up 28 percent over the same period a year ago.

Level 3 said it’s already reaping benefits from its 2014 acquisition of rival tw telecom. On its earnings conference call, CEO Jeff Storey noted that the company is implementing Constellation – the tw telecom platform that automates bandwidth provisioning for enterprises – with great success.

A continued increase in demand of its services from business customers is another big reason behind Level 3’s recent uptick. Revenue from core network services – a significant portion of which comes via partner sales – was up 6 percent.

“Level 3 had a solid start to the year, progressing on integration and generating profitable growth,” said Storey. “Customers are seeing the benefits of the acquisition, including our differentiated products and solutions, expanded network footprint and customer-first approach.”

Level 3’s network strategy will shift over the next few years, as software takes on an increasingly important role. Storey told investors and media on the call that software-defined networking (SDN) and network functions virtualization (NFV) will help customers and their end users manage their experience in near real-time. Earlier this week, Verizon laid out its strategy for a software-defined network – part of a trend that will no doubt have a big impact on traditional hardware resellers.

Just last week, Level 3 and Verizon announced an interconnection deal aimed to ensure that customers on the companies’ respective public IP networks can continue to exchange data effectively and efficiently. These types of agreements allow consumers “to enjoy high-performance speeds to enable new, high-bandwidth applications” and include provisions to add capacity that will help stay ahead of growing Internet traffic demands.

Follow senior online managing editor Craig Galbraith on Twitter.

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