Has Revenue Growth Stalled At Level 3 Communications?


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 stockholders approved the acquisition of TWTC by LVLT on October 28, 2014. Level 3 reported first quarter 2015 results on April 29 and revenues were flat from Q4.  This was the first full reportable quarter for the combined company. Total growth was flat over Q4 so is this an indication growth is stalling? Before we can answer this we need to understand management’s focus on various revenue segments after a leadership change was made.

On April 11, 2013 Jeff Storey was named CEO. The leadership change cemented what direction the company would focus on; move from being primarily a wholesale provider to a company focused on serving the day-to-day business needs of enterprise customers. These changes will drive double digit growth in both earnings, FCF (free cash flow) and EBITDA over the next several years.  This article will show how single digit revenue growth are driving double digit returns.

The company’s revenues are reported in two groups, CNS (Core Network Services) and lower margin “Wholesale Voice Services & Other” revenue.
…Continue to the rest of the article…

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