We maintain our Neutral recommendation on CenturyLink. The
company's renewed business structure is likely to reap results
going forward. Broadband expansion, faster fiber builds, better
cloud computing and hosting solutions, and penetration of Prism TV
into new markets are also likely to drive profitability.
Furthermore, CenturyLink's continued data center expansion and
related acquisitions are expected to strengthen its foothold in the
industry. However, deteriorating legacy voice and access revenues
due to wireless substitution, cash flow pressure, federal
regulations, labor issues and the constant need to upgrade
technology are some of the major risks to the company.
Based in Monroe, Louisiana, CenturyLink Inc. (CTL) is now the
third largest landline operator. The company is a rural local
exchange carrier (RLEC) that provides a range of communications
services, including local and long distance voice, wholesale
network access, high-speed Internet access, managed hosting and
collocation services, other data services and video services. In
certain local and regional markets, the company also provides fiber
transport, competitive local exchange carrier services, security
monitoring, and other communications, professional and business
CenturyLink operated approximately 13 million access lines and
served around 5.99 million broadband customers across 37 states, as
of Dec 31, 2013.
The company acquired Embarq Corporation in Jul 2009,
Denver-based Qwest Communication in Apr 2011 and Savvis Inc. in Jul
With the acquisition of Qwest and Savvis, CenturyLink revised
its products and services under the following categories:
Strategic (accounted for 48% of revenue in fiscal 2013): This
includes private line (including special access), broadband, MPLS
(data networking technology), hosting, video, voice over Internet
Protocol (VoIP) services and Verizon Wireless services.
Legacy (42%): This includes local, long-distance, switched
access (including public access), integrated services digital
network (ISDN) services and traditional wide area network (WAN)
Data Integration (3.6%): This comprises telecommunication
equipment that is located on customers' premises and related
professional services. These services include network management,
installation and maintenance of data equipment and building of
proprietary fiber-optic broadband networks for government and
Other (6.4%): Other revenue includes revenue from universal
support funds (USF). These funds are used to recover portions of
costs under federal and state cost recovery mechanisms and certain
surcharges to customers, including billings for required
contributions to several USF programs.
On Jan 3, 2013, CenturyLink announced a restructuring of its
operating segments. The company combined its network services
business sales and operations teams into a single unit. The company
now reports four segments Consumer, Business, Wholesale and Data
Consumer: The segment provides products and services to
residential consumers across 37 states.
Business: The segment advances products and services to
government, small to medium-sized businesses and enterprise
customers within the U.S. as well as in certain international
Wholesale: The segment extends products and services to other
domestic and international communications providers.
Data Hosting: The segment provides colocation, managed hosting,
cloud services and hosting-related network services to businesses
of all sizes.
CenturyLink Inc. (CTL): Read the Full Research
CENTURYLINK INC (CTL): Free Stock Analysis
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