CenturyLink completed its acquisition of Level 3 Communications during the final quarter of 2017 and has been busy integrating the two companies ever since, Glen Post, CenturyLink’s CEO explained during the company's Q4 2017 earnings call on Wednesday evening.
CenturyLink is holding to its belief that the newly-combined company will generate about 75 percent of its core revenue from business customers, and indeed, 74 percent of its revenues in Q4 2017 came from business services, opening the door to an ample sales opportunity for channel partners.
Jeff Storey, CenturyLink's president and chief operating officer and former Level 3 CEO, said that the company viewed its partner community "force multipliers" during the earnings call.
"We are able to leverage a large, external sales force to deliver our services to customers that we would not be able to address directly," Storey said. "We expect to see continued growth in the indirect channel."
To that end, the new CenturyLink said it plans on focusing getting its high-speed internet offerings, including fiber-based solutions, out to customers in more geographies.
"For the last several years, we have positioned CenturyLink from a legacy-focused telco with limited prospects for grown, to a fiber-focused provider of advanced data services and global networking. We have a lot of work ahead of us, but are excited for our future," Post said.
IT and managed services, an area that the Monroe, La.-based service provider has been putting more of an emphasis on in recent years, served as a bright spot in CenturyLink's Q4 2017 financials. IT and managed services pulled in $169 million, up about 7 percent from $158 million in the same year-ago quarter. For the full year, this segment stood at $652 million, up from $640 million in 2016, highlighting CenturyLink's focus on strategic IT solutions and away from legacy services.
While wholesale and indirect sales slipped 6.5 percent, from $1.37 billion in Q4 2016 down to $1.28 billion this quarter, enterprise revenues rose 4.8 percent year-over-year to $1.34 billion during Q4 2017 compared to $1.26 billion in the year-ago quarter.
Small and medium business sales fell 4.8 percent to $874 million during the quarter, compared to $918 million in Q4 2016, despite CenturyLink focus on this space in 2017. The service provider revealed several new offerings throughout 2017 geared specifically to SMB customers, including CenturyLink Business Wi-Fi, CenturyLink Business VoIP for small business customers, and CenturyLink Managed Enterprise with Cisco Meraki.
CenturyLink earlier this month announced it would open a new sales center in Monroe staffed with 150 employees that will serve small business customers.
Enterprise strategic revenue, the segment that includes CenturyLink's high-bandwidth data services, managed services, and SD-WAN packages, also declined from $2.03 billion during Q4 2016 to $1.91 billion in the same quarter in 2017.
In enterprise revenue for the full year, CenturyLink pulled in $5.22 billion, up a modest 1.9 percent compared to $5.05 billion during 2016. However, medium and small business revenues dipped from $3.73 billion in 2016 to $3.57 billion in 2017.
Voice and collaboration sales slipped 7.1 percent during Q4 2017 with revenues of $1.72 billion. In the same year-ago period, voice and collaboration saw $1.85 billion in sales. For the year, the segment brought in $7.06 billion compared to $7.62 billion during 2016.
Consumer revenues declined by 6.2 percent to $1.40 billion during the quarter, which the provider attributed to declining legacy voice revenues, lower broadband, and video revenues, and increased cable competition.
For the quarter that ended Dec. 31, the provider reported consolidated total revenue of $5.32 billion for fourth quarter 2017, an increase over Q4 2016's result of $4.29 billion. CenturyLink reported total revenues of $17.66 billion for the full- year compared to $17.47 billion for the full year 2016.
CenturyLink earned consolidated diluted earnings per share of $1.26 for Q4 2017, compared to diluted earnings per share of $0.08 for the same period in 2016, which the company said was impacted by a tax benefit of $1.1 billion from the enactment of the Tax Cuts and Jobs Act, as well as an additional $222 million coming from its acquisition and integration-related expenses during the final quarter of the year.