CenturyLink (NYSE: CTL) reported on Wednesday that Q2 2012
earnings rose year-over-year due to an uptick in both consumer broadband and
strategic business services.
For the quarter, operating revenues were $4.61 billion, up
from $4.41 billion in Q2 2011.
The service provider said the revenue increase was the
result of $278 million of revenue contributions from the Savvis acquisition it
completed last July in addition to consumer broadband and its emerging Prism
IPTV service.
Of course, the revenue increases were offset by expected
declines in legacy service revenue due to the impact of access line losses and
lower access revenues.
Here's a breakdown of the service provider's key unit
metrics:
Regional Markets Group (RMG): During the quarter, RMG
reported $2.48 billion in total revenues, down 2.6 percent from Q2 2011, a
factor it relates to legacy service declines. Alternatively, RMG strategic
revenues rose 5.8 percent over the same period a year ago to $894 million. On
the services side, it reduced access line loss by 22 percent as the line loss
trend improved during second quarter 2012 to a 6.1% annual decline compared to
a 7.4 percent annual decline in Q2 2011. Once again, the star performer in the
RMG portfolio was broadband. It added over 18,000 high-speed Internet
customers, ending the quarter with a total of 5.76 million subscribers. It also
expanded the number of Prism TV subscribers by 11 percent in second quarter
2012 from first quarter 2012 and increased penetration of available homes in
our markets to more than 9 percent.
Wholesale Markets Group (WMG): Like other telcos,
CenturyLink reported that the wholesale segment saw "modest" revenue
growth as fiber-based revenue offset expected decline in copper-based revenue.
Driven by the fiber and Ethernet-based service sales to wireless operators,
WMG's Q2 strategic revenues rose 2.1 percent over Q2 2011 to $572 million.
During the quarter, it completed almost 1,350 fiber builds to cell towers and
over 2,000 year-to-date, ending the quarter with about 12,150 fiber-connected
towers. The service provider said it's "on track to complete 4,000 to
5,000 fiber builds in 2012."
Enterprise Markets Group (EMG) – Network Services:
CenturyLink's EMG revenues were $333 million in the quarter, up 2.8 percent
over Q2 2011 due to high bandwidth services sales. Driven by higher than
anticipated strategic services growth in Ethernet and MPLS, overall EMG total
revenues rose 2 percent over Q2 2011 to $648 million.
Enterprise Markets Group (EMG) - Data Hosting Services: EMG
- Data Hosting, which consists mainly of Savvis' operations, reported that
operating revenues rose 6.5 percent to $277 million due to the result of strong
managed hosting (including cloud), and colocation services sales. To build a
foundation for future revenue growth, it announced planned data center
expansions in seven markets, including four that went live in Q2.
"As we enter the second half of 2012, we remain focused
on investing in broadband expansion and enhancement, Prism TV,
fiber-to-the-tower and managed hosting and cloud computing services in order to
maximize the opportunities for future revenue growth," said Glen Post,
CenturyLink's CEO and Chairman, in the earnings release.
Looking towards Q3 and the total year 2012, CenturyLink said
that operating revenues will be "negatively impacted" by the decline
in access revenues due to the FCC's USF/ICC Transformation Order.
It has forecast Q3 2012 operating revenue to come in between
$4.54 to $4.59 billion and $18.3 to $18.4 billion for the full year 2012.
Shares of CenturyLink were trading at $43.42, up $1.40, or
3.33 percent, in morning trading on the Nasdaq stock exchange Thursday.
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