Inside CenturyLink’s Outlook for the Rest of 2017



CenturyLink’s outlook for 2017

The second quarter of 2017 was a tough one for major wireline telecom companies in the US, including CenturyLink (CTL), Frontier Communications (FTR), and Windstream (WIN). CenturyLink serves 10.7 million voice line customers and 5.9 million broadband customers.

Wall Street expects CenturyLink’s (CTL) earnings to decrease for fiscal 2017. Analysts expect CenturyLink to report earnings per share (or EPS) of $1.95 in fiscal 2017 compared to EPS of $2.45 in fiscal 2016.

During CenturyLink’s 2Q17 earnings conference call, its management gave guidance on the company’s expected performance during the rest of 2017.

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Key points from CenturyLink’s outlook

CenturyLink’s (CTL) management anticipates generating operating revenues between $4.06 billion and $4.12 billion in 3Q17 compared to the actual revenue figure of $4.38 billion in 3Q16. The company also anticipates generating core revenues between $3.59 billion and $3.65 billion in 3Q17 compared to the actual core revenue figure of $3.91 billion in 3Q16.

The company’s management expects adjusted EBITDA[1. earnings before interest, tax, depreciation, and amortization] between $1.43 billion and $1.49 billion in 3Q17. Additionally, the company expects its 3Q17 adjusted diluted EPS to be in the range of $0.44–$0.50.

CenturyLink’s management expects to report slightly below its guidance for its fiscal 2017 operating revenues and adjusted diluted EPS, “driven by higher legacy revenue declines and lower consumer broadband revenue growth than anticipated.” The company also expects to achieve the low end of its 2017 guidance for adjusted EBITDA and adjusted free cash flow (or FCF).

CenturyLink’s competitors

In addition to traditional competitors Verizon (VZ) and AT&T (T), Comcast (CMCSA), Frontier Communications, and other cable companies are increasing their presence in the business services market, working to gain market share.

However, a combined CenturyLink/Level 3 Communications company would be more resilient against its competition. CenturyLink has agreed to purchase Level 3 Communications for $34 billion in cash and stock.


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