CenturyLink, Level 3, On Path to Merge, Report Smaller Profit

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

CenturyLink netted $163 million compared to $236 million for the year-ago quarter. Its total operating revenues in the first quarter were $4.2 billion, compared to $4.4 billion for the year-ago quarter.

“CenturyLink’s first quarter high-bandwidth data services revenues for enterprise customers grew by 2 percent sequentially and 4 percent year-over-year, driven by increasing demand for higher-speed enterprise data services as businesses continue their digital transformation,” said Glen Post III, CenturyLink’s president and CEO. “This increasing demand further validates the rationale for our pending acquisition of Level 3 Communications, which will transform CenturyLink into the second largest domestic communications provider serving global enterprise customers.

Level 3 reported $95 million in profit, including a $44 million pre-tax loss on the extinguishment and modification of debt, compared to $128 million for the year-ago quarter. Overall revenue was $2.05 billion, on par with a year ago.{ad}

“In the first quarter 2017, we continued to grow our enterprise core network services revenue and we remain focused on delivering profitable growth,” said Jeff Storey, Level 3’s president and CEO. “In addition, we continue to make good progress and are working hard on integration planning, so the combined company can execute quickly after the transaction closes.”

Expect CenturyLink’s acquisition of Level 3 to be complete by Sept. 30.

“We continue to make good progress in obtaining the necessary approvals for the pending Level 3 acquisition and integration planning for the combination is on track,” Post said. 

CenturyLink’s enterprise segment revenues were $2.36 billion in the first quarter, down 3.5 percent from the year-ago quarter, primarily due to a decline in legacy revenues — but partially offset by 4.2 percent growth in high-bandwidth data services revenues. Strategic revenues were $1.08 billion in the quarter, up 2.9 percent from a year ago.

This week, CenturyLink completed the sale of its data centers and colocation business with net after-tax cash proceeds of about $1.75 billion.

Level 3’s core network services (CNS) revenue in the first quarter was $1.6 billion in North America and $1.94 billion globally, compared to $1.6 billion and $1.94 billion for the year-ago quarter.

Enterprise CNS revenue totaled $1.45 billion globally compared to $1.41 billion a year ago. Wholesale CNS revenue was $494 million globally, compared to $537 million the same period last year.

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