Perhaps stung by the market's reaction to last week's earnings, Level 3 Communications (NYSE:LVLT, news, filings) has gone on offense this week on multiple fronts - the most interesting one not yet appearing in a press release (oh wait, there it is now).
According to reports, the company is in the process of raising $1.4B in order to push out the part of its term loans that come due in 2014, with $1.1B of the new funds due in 2019 and perhaps $300M due in 2015 or 2016. This should surprise no one, as they always move early on such debt overhangs and the debt markets remain happy with their progress on the integration. What this does, assuming it closes of course, is to clear up the next roadblock in the distance, giving them clear sailing for a while as they finish up the Global Crossing integration and keep looking for ways to boost organic growth a few notches. And just this morning, Level 3 has announced its intention to raise another $400M in senior notes due in 2020 to help refinance its 8.75% notes due 2017, of which $700M are outstanding. Evidently they feel there is a favorable window in the debt markets.
Over in the UK, Level 3 got a bit of good news for once on the UK government front. They have been named as a PSN Framework supplier for five service categories: communication, conferencing, contact centre, gateway, and unified. While it doesn't mean immediate revenues, like with Networx in the US it helps put them in position to grow this segment again over the next few years.
In Latin America where solid growth was offset by currency weakness during Q2, Level 3 picked up another important content deal -- this time in Mexico. TV Azteca will be using their Vyvx broadcast and managed services to bring international sporting events to its Azteca 7 and Azteca 13 networks. This will be the first time they'll have such broadcasts coming in 100% over fiber rather than satellite, as Vyvx takes full advantage of the former Global Crossing's fiber assets in and around Mexico.
And back on their home turf, Level 3 extended their voice services off their fiber footprint and into the last two states they hadn't entered: Alaska and Hawaii. The expanded coverage area will be available for their local inbound and enhanced local services. Customer demand for services in those areas drove the expansion, allowing the consolidation of services under a single carrier.
While the stock markets didn't much like the company's earnings last week, the stock price has already started to climb back towards where it was. There wasn't that far down it could go with overall fiber sector valuations being what they are. Should be interesting to see other competitive fiber operators report next week.
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