CenturyLink Channel Leader Wants Channel To Become Fastest Growing Unit

CenturyLink plans to use the channel as one of its fastest routes to growth, but channel integration has to make sense and be done methodically, according to Lisa Miller, CenturyLink’s president of wholesale, indirect channels and alliances.

Miller explained to partners at master agent PlanetOne's Tech Tour event that the company will put a governance board in place for channel integration purposes. That committee will evaluate all renewal opportunities and help protect partners from being removed from a deal, while at the same time, ensuring that CenturyLink's direct sales side isn't being slowed down.

"There will be no change in how we engage with channel partners from now until the end of the year. Next year, we'll have dedicated teams ... and we will resource the channel appropriately. We want the channel to be an investment," Miller told an audience of solution providers the same day that the company reported disappointing third-quarter earnings.

[Related: CenturyLink Gets FCC Approval To Buy Level 3, Partners 'Anxious' About Possible Channel Changes]

CenturyLink blamed its weak financial results during the third quarter on lower-than-anticipated growth in enterprise revenues. "For the third quarter, we came in at approximately $65 million below our internal expectations for enterprise revenue," CenturyLink's CEO Glen Post explained during the carrier's Q3 earnings call on Wednesday evening.

Enterprise revenues declined 11.2 percent to $2.17 billion in Q3 2017 from $2.44 billion in the year ago quarter, which the carrier attributed to revenue reduction associated with the sale of its co-location business, as well as the decline in legacy and data integration revenues, according to Stewart Ewing, CenturyLink's chief financial officer.

Legacy revenues for the segment declined 9.4 percent in Q3 2017 compared to Q3 2016, due primarily to the continuing decline in voice and low-bandwidth data services, CenturyLink said.

Post said that CenturyLink also generated about $20 million less growth in high-bandwidth data services than it had expected.

CenturyLink's enterprise strategic services unit, which includes high-bandwidth data services, managed services, and SD-WAN packages, saw revenues that fell to $949 million in the quarter, compared to $1.08 billion in the year-ago quarter.

At the top of the call, Post welcomed Level 3 Communications' former president and CEO Jeff Storey to the company. Storey is now serving as the chief operating officer for CenturyLink and will become CEO of the newly-combined company after Post retires in 2019.

Post referenced the closing of its Level 3 deal earlier in the week, saying that the combination will create a powerful, global network.

"Together, we have a compelling set of assets, the scale to compete globally and the opportunity to drive significant operational efficiencies. With more on-net capacity than ever before, a strong sales force and leading products, we are more confident than ever in our ability to gain market share in the months ahead," Post said.

Storey addressed shareholders and analysts by reminded the audience that the newly combined company would focus primarily on business services. The companies believe that together, CenturyLink's enterprise revenues will rebound.

"The indirect channel at Level 3 was the fastest growing enterprise business in the company," Miller said. "We want that same thing to happen on the CenturyLink side where we become the fastest growing piece of the overall business."

Consumer revenues also took a hit during the third quarter, falling 5.8 percent from $1.47 billion down to $1.39 billion during the quarter, due to declining legacy voice revenues and lower broadband and video revenues, according to the carrier.

For the quarter that ended Sept 30, operating revenues fell 8 percent to $4.03 billion during the third quarter compared to $4.38 billion in the year-ago quarter. The carrier earned a diluted $0.17 per share compared to $0.28 a share a year ago, representing a decline of 39 percent.

Net income for the quarter was $92 million, falling from $152 million in Q3 2017.

Storey also took to its earnings call to share Level 3's positive third-quarter results. The Broomfield, Colo.-based provider, reported total revenues of $2.059 billion for the quarter, up from its Q3 2016 result of $2.03 billion. Total Core Network Services (CNS) revenue was $1.963 billion in Q3, which was up 1.8 percent year-over-year, according to Storey.