CenturyLink would like to be your communications hook-up for more than the next 100 years. Historically a regional wireline local and long-distance telephone provider, it's connecting with the times by transforming into a broadband and network services provider for residential, business, and government clients. Its capital expenditures average $3 billion a year. The company is the third-largest US wireline telecom company by total access lines, and is the incumbent local carrier in 37 states, though three-quarters of its lines are in just a dozen. Additionally, CenturyLink provides wireless service through Verizon. In 2016 CenturyLink and Level 3 Communications agreed to merge in a $34 billion deal.
CenturyLink operates two segments: Business and Consumer.
The Business segment, 59% of sales, consists of private line, broadband, Ethernet, MPLS, Voice over Internet Protocol, network management services, colocation, managed hosting and cloud hosting services for enterprise, wholesale, and governmental customers, including other communication providers.
The Consumer segment, 35% of sales, offers broadband, wireless, and video services, including Prism TV services. It also offers local and long-distance service.
Other operating revenue accounted for the remainder.
CenturyLink operates almost 74% of its total access lines in portions of Arizona, Colorado, Florida, Iowa, Minnesota, Missouri, New Mexico, Nevada, North Carolina, Oregon, Utah, and Washington (the company has paid a reported $75 million to put its name on the Seattle Seahawks stadium on the city's waterfront for 15 years).
It also provides local service in parts of Alabama, Arkansas, California, Georgia, Idaho, Illinois, Indiana, Kansas, Louisiana, Ohio, Michigan, Mississippi, Montana, Nebraska, New Jersey, North Dakota, Oklahoma, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Virginia, Wisconsin, and Wyoming,
The company operates 60-some data centers throughout North America, Europe, and Asia.
CenturyLink's revenue has hovered around $18 billion for the past four years and profit rebounded in the past two from a loss in 2013.
The company's sales dropped to $17.9 billion in 2015 from $18 billion in 2014. The Business segment sagged 3% from a decline in wireline service and related products and services. The Consumer segment's notched up about 3% on rising subscriptions to the Prism TV service.
In 2015, net income increased by 14% to $878 million primarily due to decrease in depreciation and amortization and Selling, general and administrative partially offset by an increase in Income tax expense.
CenturyLink dialed up a 14% profit increase in 2015 from cost reductions. Profit hit $878 million due to decrease in depreciation and amortization and selling, general and administrative partially offset by an increase in Income tax expense.
Higher accounts payable drained some of the cash generated from operations in 2015, reducing it to $5.1 billion from $5.3 billion in 2014.
CenturyLink is expanding its services, particularly those oriented toward cloud computing. In 2015, the company made its public cloud service available in the Asia Pacific region through its date center in Singapore. It also extended its cloud services to Australia through an agreement with NEXTDC Limited. The company also opened a cloud development center in Seattle to work with developers.
CenturyLink is spending about $3 billion on capital expenditures to build out its broadband access. In 2016 the company is rolling high-speed Internet access to more markets. Speeds range from 40 mpbs to as high as 1 gigabyte. Besides spending on hardware and construction to get fiber to the home, the company is expanding reliance on software (Software Defined Networks and Network Function Virtualization) to increase the capacity and flexibility of its networks. Bigger rivals such as AT&T and Verizon are also making big investments in software tools and systems.
CenturyLink is using another $500 million received from the federal government through the Connected America Fund to bring broadband access to rural areas.
Mergers and Acquisitions
The proposed $34 billion dollar merger of CenturyLink and Level 3 Communications would be one of the largest telecommunications service providers in the US. Together, they would own a network that connects more than 350 metro areas in the US. Overseas, they would have a presence in more than 60 countries. While each company has a nationwide network, they say their combination would bring together complementary assets and not result in less competition. With Level 3 carrying some $10 billion in net operating losses, the combined company's tax bill would be low, freeing up cash flow for developing more infrastructure. The deal is expected to close by the third quarter of 2017.
In 2016 CenturyLink added a security element to its networking business with the acquisition in 2016 of netAura. The company specializes in engineering, developing, and consulting on managed security technologies.
In 2014, CenturyLink acquired Cognilytics, a provider of advanced predictive analytics and Big Data to mid-sized and large enterprises. The acquisition will allow CenturyLink to offer more services that help customers collect and analyze data.