Level 3 Communications (NYSE:LVLT, news, filings) said today that it is taking its new approach to local markets to the Philadelphia area. Level 3 has a very large presence in Philadelphia with over 300 enterprise buildings on-net and more than 100 wholesale targets. Some of that presence came with the original build, but much of it was part of the Telcove footprint which was huge all throughout Pennsylvania. It's nice to see them finally making a real effort to take advantage of their assets in the region.
The company began this effort with 5 markets back in May, but has been quiet since. Now, after 5 months under their belt they are finally ready to expand the effort - which implies that they have found some merit in it. Of those original 5, last May I suggested that Philadelphia might most closely resemble the Denver Front Range market in terms of their presence and could be a followup target - nice to be right for once. The 'Philadelphia area' they cite is actually a bit broader than that, including Camden, Reading, Allentown, and Wilmington. Having grown up and lived in the region much of my life I can say that those are nearby, but with the exception of Camden they're not *that* nearby, especially Allentown. So it's more of a Philadelphia region, composed of several distinct metro networks linked by regional fiber.
The last local expansion group was of 5 markets, and the company has said it would double that by the end of the year. Philadelphia makes 6, so they will probably be rolling out one every few weeks from here on out if not quicker. Perhaps they will complete the set, creating a Western Pennsylvania group based in Harrisburg (one of their largest markets nationwide) but covering the other economically similar non-Philadelphia urban centers in the state - not unlike the upstate NY region back in May. That would give them several adjacent regions with local focus - upstate NY, Philadelphia area, Western PA, and the DC area. Or perhaps they will space things out more.
I am curious to see if in their earnings call Level 3 will give us any insights into how the changes to the initial 5 markets affected their performance. What kind of progress are they seeing with the enhanced local focus?
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