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Level 3’s Revenue in 4Q15 below Wall Street Expectations

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Level 3’s revenue in 4Q15

In the previous part of this series, we looked at Level 3 Communications’ (LVLT) 4Q15 earnings and guidance for 2016. Now let’s look at the company’s top line.

The company’s 4Q15 revenue was below Wall Street analysts’ expectations. Level 3’s revenue was ~$2.1 billion in 4Q15. This figure was ~0.5% below the consensus estimate of Wall Street analysts. In 4Q14, the company’s revenue was ~$1.9 billion.

As we can see in the above bar graph, except for 3Q15, Level 3’s revenues have been below Wall Street analysts’ expectations in the past five quarters. During 4Q14, Level 3’s revenue was ~1.8% below expectations.

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Segment contributions to Level 3’s 4Q15 revenue

The company’s Core Network Services (or CNS) revenue continued its YoY (or year-over-year) increasing trend in 4Q15. However, the Wholesale Voice Services and Other revenue continued to decline during the quarter.

Level 3’s CNS revenue increased by ~2.4% YoY to ~$1.9 billion in 4Q15 if we take the pro forma results of the company, excluding Venezuela, into account. According to the company, excluding the currency impact, the comparable revenue metric would have increased by ~4.4% YoY during that quarter.

The biggest contribution to this CNS revenue of ~81% came from North America during 4Q15. Meanwhile, EMEA (Europe, the Middle East, and Africa) and Latin America (excluding Venezuela) accounted for ~11% and ~8%, respectively, of the segment’s revenue during 4Q15.

During the quarter, the company’s Wholesale Voice Services and Other revenue decreased by ~17.9% YoY to ~$110 million.

For a diversified exposure to select US telecom companies, you can consider investing in the SPDR S&P 500 ETF (SPY). The ETF had a total of ~2.4% in AT&T (T), Verizon (VZ), CenturyLink (CTL), Frontier Communications (FTR), and Level 3 Communications at the end of December 2015.

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