CenturyLink Continues Strategic IT Services Push as Consumer Services Land On Chopping Block

CenturyLink said it is evaluating strategic alternatives for its consumer business during its Q1 2019 earnings call. Meanwhile, enterprise revenues and small and medium business revenues dipped during the first-quarter and CenturyLink said it will be leaning more on partners to help in the SMB segment.

CenturyLink, a service provider that generates three-quarters of its revenue from business customers, announced that it is potentially shopping around its consumer business.

Jeff Storey, CenturyLink's president and chief operating officer and former Level 3 CEO said that CenturyLink is "evaluating strategic alternatives" for its consumer business during the service provider's Q1 2019 earnings call on Wednesday evening.

"Generally speaking, the more enterprise-focused, network-related, and fiber-based and growth-oriented it is, the more core it is to our future," Storey told investors.

CenturyLink is the second-largest U.S.-based communications provider to global enterprise customers behind cable competitor Comcast. The company has earned about 75 percent of its revenue is from its business services since the coming together of Level 3 Communications and CenturyLink in 2017.

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Enterprise sales, a segment that includes CenturyLink's high-bandwidth data services, managed services, and SD-WAN packages, also slipped slightly by 1.9 percent to $1.52 billion from $1.55 billion in 2018's first-quarter. Neel Dev, CenturyLink's executive vice president and CFO, said that strength in strategic IT services, such as hybrid networking, SD-WAN, cloud, and edge computing will help improve enterprise revenues.

"We think there is room for improvement in our revenue performance, especially considering the scope and scale of our assets and capabilities," Dev said.

Small and medium business sales dipped down 3.6 percent to $755 million during the quarter compared to $784 million in Q1 2019. CenturyLink has been placing a bigger emphasis on the small and medium business market for the last year with strategic IT solutions geared toward these customers. Storey said that the company will continue to improve the way it approaches this market and will rely on its channel partners for help. Storey in 2017 referred to CenturyLink's partner community "force multipliers."

"Our ability to meet their needs with our extensive product portfolio has been a differentiator. We can solve our customers connectivity challenges big and small, managed or unmanaged," Storey said.

CenturyLink in April introduced its highly anticipated, consolidated channel agreement for all of its partners. Lisa Miller, CenturyLink's president of wholesale and indirect channels and alliances, told CRN that the agreement had been designed to incentivize its partners to sell strategic IT services, such as hybrid networking and cloud services.

Consumer revenues declined by 8.2 percent to $1.44 billion during the quarter compared to Q1 2018's result of $1.57 billion, which the provider attributed to declining legacy voice and video revenues. CenturyLink said that it has already engaged external advisors to assist in its strategic alternatives process for the Consumer business. The Monroe, La.-based carrier said it won't comment on the process further until it is complete or further disclosure is required.

For the quarter which ended on March. 31, the provider reported total revenue of $5.65 billion and diluted earnings per share of 34 cents, compared to $5.95 billion and 25 cents per share in the year-ago quarter.

CenturyLink reported net Income of $360 million for the quarter, which increased compared to last year's result of $262 million.