Level 3 Communications: A Long Idea At An Attractive Value


Level 3 Communications (NYSE:LVLT) is a global communications provider headquartered in Broomfield, Colorado, that provides communications services to enterprise, government and carrier customers in more than 60 countries around the world. Level 3 operates one of the world’s largest Internet backbones.

LVLT and tw telecom (NASDAQ:TWTC) stockholders approved the acquisition of TWTC by LVLT on October 28, 2014. LVLT will report third quarter 2014 results on Wednesday, Nov 5, 2014 and plans to discuss third quarter results for both Level 3 and tw telecom.

This article is an in-depth look at Level 3 Communications for those not yet familiar with the company. Topics include:

  • Management Change
  • TWTC Acquisition
  • Financials (Pro-Forma)
  • Growth outlook (Pro-Forma)
  • Valuation (Pro-Forma)
  • Debt (Pro-Forma)
  • NOL’s
  • Competition
  • Open tax issues
  • Final thoughts

Management Change

LVLT ran into major problems integrating past acquisitions resulting in the resignation of the then, president, COO and co-founder. Jeff Storey was brought in as president and COO as the company was experiencing the following:

  • An increase in the time it took to activate service for customers, hurting revenue growth
  • The company was taking longer to resolve customer network service issues
  • The company didn’t have adequate provisioning capability to convert orders to revenue
  • The company lacked adequate internal controls

Growth stalled but the problems were resolved avoiding what would have been a disaster for the company.

Doubts still remained concerning Level 3’s ability to turn the ship around under the current CEO. In April, 2013 LVLT issued a statement concerning a leadership transition…
…Click Here To Continue To The Full Article…

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