Level 3 Communications makes valuable connections through its networking efforts. Operator of one of the world's largest fiber-optic communications networks, the firm connects customers in 60 countries. Its services include broadband Internet access, wholesale voice origination and termination, enterprise voice, content distribution, broadband transport, and colocation. Wholesale customers include ISPs, telecom carriers, cable-TV operators, wireless providers, and the US government. The company markets its products and services directly to businesses, state agencies, and schools. Its content delivery unit targets video distributors, Web portals, online gaming and software companies, and social networking sites.
The fiber network giant generates revenue through a pair of segments: Core Network Services and Wholesale Voice Services and Other.
Its primary Core Network Services business, which accounts for 91% of revenue, is composed of colocation and data center services, transport and fiber, IP and data services, and voice services. Generating 9% of Level 3's revenue, Wholesale Voice Services and Other consists of long distance voice services, revenue from managed modem and its related intercarrier compensation services, and revenue from the "SBC Master Services Agreement" (obtained through a 2005 acquisition).
Based in Broomfield, Colorado, Level 3 operates in North America, Latin America, and Asia/Pacific. The North America region accounts for about three quarters of the firm's revenue. Besides operating 20 data centers across North America, Latin America, and Europe, Level 3 owns or leases about 370 facilities worldwide. It runs 250 colocation facilities in North America, supported overseas by more than 100 colocation facilities in Europe and a dozen or more such offices in Latin America.
Sales and Marketing
Level 3 serves customers in 500-plus markets worldwide through owned fiber networks on three continents. The company's top 10 communications customers in 2014 accounted for approximately 17% of Level 3's total communications revenue.
Level 3 reached a new level in 2014 when it posted a profit for the first time. The company made $314 million for the year after nine years of losses, including a loss of $109 million in 2013. Its revenue rose 7% in 2014 to $6.8 billion. The core network services segment increased revenue 11% for the year, abetted by revenue from acquiree tw telecom. The higher revenue and tax benefits combined to put Level 3 into the black.
Key to Level 3's strategy and market competitiveness is its expansive global network infrastructure, which extends to major metropolitan markets in the US, Europe, and Latin America. Expanding that network is a primary focus of the company's strategy. Relying on its own network instead of other carriers (which it needs for some locations) drives its customer targeting.
In 2014, Level 3 expanded its government services with a contract from the US Department of Homeland Security to provide a range of local area network managed services for the agency within the National Capital Region. Under the contract, developed along the network as a service model, Level 3 will connect about 60 DHS locations.
In Brazil, the company agreed to provide Fototica, an eye care provider in Brazil, with virtual hosting, colocation and redundancy services for business operations in the Brazilian states of Sao Paulo, Bahia, Pernambuco, and Sergipe.
In 2013 the company also expanded an existing agreement with MLB Advanced Media (MLBAM) -- Major League Baseball's interactive media and Internet company -- to include data center services for the company's leading digital media products (including MLB.TV live video streaming). It has also entered long-term settlement-free Internet traffic exchange agreements (known as peering agreements) with XO Communications.
Mergers and Acquisitions
In mid-2014 the company bought tw telecom in a stock-and-cash transaction valued at $5.7 billion in order to create a stronger competitor to the incumbents. While Level 3 has an extensive global presence, tw telecom offers a deep metropolitan footprint in the US, serving 75 markets in about 30 states.