CenturyLink CEO: '5G Or Not, Fiber Wins'
‘Expanding our fiber is a major area of focus for us … whether it's 5G or not, fiber wins,’ says Jeff Storey, CenturyLink's president and CEO during the provider's Q2 2019 earnings call.
CenturyLink wants to become the premier fiber-based provider for business customers, according to Jeff Storey, CenturyLink's president, CEO, and former Level 3 CEO.
Storey pledged to continue to aggressively expand its fiber footprint because fiber, he said, will ultimately beat out other connectivity options in terms of performance, especially for next-generation use cases that are happening at the edge of the network.
"Expanding our fiber is a major area of focus for us … Fiber beats twisted pair copper, hybrid fiber coax, and it beats wireless, whether it's 5G or not, fiber wins," Storey told investors during the telecom's Q2 2019 earnings call on Wednesday evening.
Fiber is one way that CenturyLink plans to boost its Enterprise and Small and Medium Business revenues, executives said. Enterprise, a segment that includes CenturyLink's high-bandwidth data services, managed services and SD-WAN services, stayed relatively flat at $1.50 billion during the carrier's fiscal second quarter compared to $1.52 billion in 2018's Q2. However, Storey said that the company expects enterprise revenues to rise during the second-half of the year.
Small and medium business sales fell 11 percent during the quarter to $736 million compared to $819 million in Q2 2018 despite CenturyLink trying to focus strategic IT services geared toward the small and medium business market. Neel Dev, CenturyLink’s executive vice president and CTO, said that SMB revenue declines are largely driven by legacy products, but that the carrier "feels confident" it can return to profitability by selling to more businesses on its on-net fiber footprint.
Storey said that Lisa Miller, CenturyLink's president of wholesale and indirect channels and alliances, is "committed" to selling to small and midsized businesses who were outside of the legacy CenturyLink footprint.
"Level 3 didn't focus there because they weren't the type of customer we focused on, CenturyLink never focused there because they didn't have the network to sell to those types of customers," he explained. "It's now a great opportunity for us and we need to focus and drive toward new opportunities with these customers."
Consumer revenues continued its downward trajectory, falling by 8.4 percent to $1.42 billion during the quarter compared to Q2 2018's result of $1.54 billion. CenturyLink today generates three-quarters of its revenue from business customers. During the provider's Q1 2019 earnings call, Storey revealed that it was considering shopping around its consumer business. The executive said that CenturyLink's internal teams are making "good progress" with the review, but that it will be a lengthy and complex process. In the meantime, Storey said the company won't modify consumer investments and will continue to transform the Consumer business unit.
For the quarter which ended on June 30, Monroe, La.-based CenturyLink reported net income of $371 million in Q2 2019, which increased 21 percent compared to last year's result of $292 million. The provider reported total revenue of $5.58 billion and diluted earnings per share of 35 cents, a decline of 5.4 percent compared to $5.90 billion and 27 cents per share in the year-ago quarter. CenturyLink's revenue came in just slightly lower than Wall Street analysts’ estimate of $5.59 billion.