Level 3 Finds a Bit of Revenue Growth

May 4th, 2017 by · 1 Comment

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

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