Level 3 Finds a Bit of Revenue Growth

Yesterday Level 3 Communications posted its Q1 2017 numbers, finding some growth on the enterprise front in the Americas.  The combination with CenturyLink is expected to close during Q3, and sometimes there can be a bit of focus lost between announcement and closure, but so far Level 3 seems to be holding pretty steady.  Here are the company’s numbers in some context:

$ in millions	Q1/16	Q2/16	Q3/16	Q4/16	Q1/17	Comments
– North America – Wholesale	434	443	412	405	403	More enterprise strength
– North America – Enterprise	1167	1162	1160	1179	1191
– EMEA – Wholesale	65	63	61	55	55	Still pretty weak across the Atlantic
– EMEA – Enterprise	107	110	104	108	106
– EMEA – UK Government	19	18	17	16	14
– Latin America – Wholesale	39	37	37	34	36	Solid results from South America
– Latin America – Enterprise	116	123	139	136	141
Total Core Network Services	1,947	1,956	1,930	1,934	1,946	Up sequentially again
– Wholesale Voice & Other	104	100	103	98	102	A bit stronger
Total Revenue	2,051	2,056	2,033	2,032	2,048	Meeting expectations
Network Access Costs	694	676	675	680	691
Network Expenses	331	339	337	332	336
Cash SG&A	316	326	305	311	316	Included $20M and $15M of aquisition expenses in Q1 and Q4
Adjusted EBITDA	710	715	716	709	705	Down sequentially on acquisition costs.
Adjusted earnings per share	0.35	0.41	0.40	0.70	0.34	Analysts were looking for 0.37
Network access margin %	66.2%	67.1%	66.8%	66.5%	66.3%
Adj. EBITDA margin %	34.6%	34.8%	35.2%	34.9%	34.4%
Capital Expenditures	297	367	364	306	368
Free Cash Flow	213	264	281	251	171	Includes $2M in acquisition expesnes

Some $20M was spent on costs associated with the CenturyLink deal, which held down total Adjusted EBITDA, although at $725 without them that number would have been the best we have seen.  Last quarter they raised capex guidance, and the $368M spent during the quarter reflected those plans.

Last week we learned that Laurinda Pang will be joining Sunit Patel in the management structure of the combined company after the CenturyLink deal closes as executive vice president, global accounts management and international.  She will be responsible for sales, revenue generation and enterprise service delivery for the company’s top global accounts and for the company’s APAC, EMEA and LATAM markets.

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Categories: Financials · Internet Backbones