Earnings Preview: Level 3 and tw telecom

With the close of the deal late last week, Level 3 Communications and tw telecom are now a single entity at least on paper. But tomorrow we will hear about how Q3 went for the two of them when still separate.

While the success or failure of the integration ahead really doesn’t hinge on small swings in revenue or costs during the run-up to the deal, the markets will nevertheless be watching for any stumbles on the way in. But I think the key this quarter is to listen to just how Level 3 plans to merge the two enterprise businesses. We might not get all that much detail right away, but we should be able to taste the flavor. Whose trajectory will shift? Or will they opt for a more parallel, multiple trajectory approach to the different parts of the enterprise market?  My guess is they’ll do their best not to rock either boat initially while they move internally to merge the local teams city by city.  It’s those local feet on the ground that have been the engines of growth for bot, and they have to get that part right.

In the meantime, however, we have the numbers. Here are my guesses for both companies with a few quarters of context.  They are conservative in that I expected to see a bit of hesitancy on revenues at tw telecom going into the merger just on the basis of human nature.  We may not get all these numbers this time, but who knows.

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