CenturyLink, Inc. (CTL)

CTL 
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CenturyLink (CTL)

Q3 2012 Earnings Call

November 07, 2012 5:00 pm ET

Executives

Tony Davis - Vice President of Investor Relations

Glen F. Post - Chief Executive Officer, President, Director and Member of Special Pricing Committee

R. Stewart Ewing - Chief Financial Officer and Executive Vice President

James Ernest Ousley - Chief Executive Officer, President of Enterprise Markets Group and Member of Business Development Committee

Analysts

David W. Barden - BofA Merrill Lynch, Research Division

Batya Levi - UBS Investment Bank, Research Division

Simon Flannery - Morgan Stanley, Research Division

Frank G. Louthan - Raymond James & Associates, Inc., Research Division

Michael McCormack - Nomura Securities Co. Ltd., Research Division

Scott Goldman - Goldman Sachs Group Inc., Research Division

Michael Rollins - Citigroup Inc, Research Division

Kevin Smithen - Macquarie Research

Timothy K. Horan - Oppenheimer & Co. Inc., Research Division

Brian Turner

Presentation

Operator

Good day, ladies and gentlemen, and welcome to the CenturyLink's Third Quarter 2012 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded.

I would now like to turn the conference over to Mr. Tony Davis, Vice President of Investor Relations. Mr. Davis, you may begin.

Tony Davis

Thank you, Saeed. Good afternoon, everyone, and welcome to our call today to discuss CenturyLink's third quarter 2012 results released earlier this afternoon. The slide presentation we will be reviewing during the prepared remarks portion of today's call is available in the Investor Relations section of our corporate website at ir.centurylink.com. At the conclusion of our prepared remarks today, we will open the call for Q&A.

On Slide 2, you'll find our Safe Harbor language. We will be making certain forward-looking statements today, particularly as they pertain to guidance for fourth quarter and full year 2012, some outlooks for 2013, the integration of Qwest and Savvis and other outlooks in our business. We ask that you review our disclosure found on this slide, as well as in our press release and in our SEC filings, which describe factors that could cause our actual results to differ materially from those projected by us in our forward-looking statements.

We ask that you also note that our earnings release issued earlier this afternoon and the slide presentation and remarks made during this call contain certain non-GAAP financial measures. Reconciliation between the non-GAAP financial measures and the GAAP financial measures are available in our earnings release and on our website at www.centurylink.com.

Now turning to Slide 3. Your host for today's call is Glen Post, Chief Executive Officer and President of CenturyLink. Joining Glen will be Stewart Ewing, CenturyLink's Chief Financial Officer. And also available during the question-and-answer period of today's call will be Karen Puckett, CenturyLink's Chief Operating Officer, who leads our Regional Markets Segment; Bill Cheek, President of our Wholesale Markets Segment; and Jim Ousley, Chief Executive Officer of Savvis and President of our Enterprise Market Segment.

Our call today will be available for telephone replay through November 14, 2012 and accessible by webcast through November 28, 2012. Anyone listening to a tape or webcast replay or reading a written transcript of this call should note that all information presented is current only as of November 7, 2012 and should be considered valid only as of this date regardless of the date heard or viewed.

As we move to Slide 4, I will now turn the call over to your host today, Glen Post. Glen?

Glen F. Post

Thank you, Tony. Good afternoon, everyone, and thank you for joining us today. First, I want to express my sympathies to those affected by the storm along the East Coast last week. Located in Louisiana, we, of course, are all too aware of the devastation of hurricanes and tropical storms can create, and our thoughts are with all those affected.

CenturyLink did experience some operational disruptions as a result of the storm. However, we are pleased that all of our East Coast data centers remained fully functioning during the storm, so we could continue to serve our customers during this difficult time.

Early indications are that we experienced about $5 million to $6 million of operating and capital expenses as a result of the storm, so we were relatively displaced less than I know many were. I also want to thank our employees for their hard work and dedication to ensuring the best possible service for our customers during this difficult time.

Now I'll turn to discuss CenturyLink's third quarter 2012 results and guidance for our fourth quarter and full year 2012, as we provide other updates -- as well as provide other updates about our business.

During the third quarter, CenturyLink has achieved solid results, and we continue to make progress on a number of fronts. We remain on track to meet our synergy targets for the Qwest and Savvis transactions and continue to make progress with the integration of these 2 acquisitions. We continue to see solid growth in our Enterprise Markets and Regional Markets business segment with continued demand for integrated network, colocation, managed hosting and cloud services.

We also continue to invest in additional data center capacity to drive further growth from these services in the months ahead. With our fiber-to-the-tower initiative, we continue to make excellent progress in completing fiber builds, enabling high-bandwidth Ethernet data services to support the growing demand for wireless data backhaul capacity. We are experiencing some near-term revenue pressure resulting from the transition from copper-based data services to fiber and Ethernet connectivity. However, we are confident that our investment in fiber-to-the-tower will generate good returns and provide solid revenue growth over the lives of these agreements.

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