What Were the Dynamics of CenturyLink’s Core Revenue in 1Q16?



CenturyLink’s core revenue in 1Q16 and 2Q16

In the previous part of this series, we saw that CenturyLink’s (CTL) revenue declined ~1.1% YoY (year-over-year) to ~$4.4 billion in 1Q16. The declining trend in CenturyLink’s core revenue continued during the quarter. It decreased ~1.9% YoY to ~$4.0 billion. In 2Q16, the company expects to have core revenue of $3.9 billion–$4.0 billion.

CenturyLink’s strategic services continued to grow in 1Q16. Meanwhile, its legacy revenue continued to shrink. The carrier’s strategic revenue increased ~1.5% YoY to ~$2.4 billion in 1Q16. Its legacy revenue declined ~6.4% YoY to ~$1.6 billion.

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Growth drivers within strategic services

In 1Q16, business high-bandwidth data services and consumer high-speed Internet components continued to drive strategic services revenue growth. Revenue from business high-bandwidth data services increased ~7.4% YoY to reach ~$0.74 billion.

Meanwhile, CenturyLink’s consumer high-speed Internet component generated ~$0.67 billion of revenue, a YoY growth of ~5% for the quarter.

In the 1Q16 conference call, Stewart Ewing, CenturyLink’s CFO (chief financial officer), said the company “added approximately 16,900 Prism TV customers, while high-speed internet customers increased nearly 7,800 during the quarter.” At the end of 1Q16, the company had ~6.1 million high-speed Internet customers and ~0.3 million Prism TV subscribers.

For a diversified exposure to select US wireline telecom companies, you can consider investing in the First Trust Utilities AlphaDEX ETF (FXU). FXU held a total of ~19.9% in AT&T (T), Verizon (VZ), Level 3 Communications (LVLT), CenturyLink (CTL), and Frontier Communications (FTR) at the end of April 2016.

In the next part, we’ll see when CenturyLink’s data center transaction might be finalized.


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