CenturyLink (NYSE:CTL) has performed impressively this year with strong stock price gains. There are certain key drivers behind its terrific performance. Strong improvement in its revenue trend, improvement in call revenues, and the lower rate of decline in legacy revenue have been key drivers for the stock.
Its recent results were also quite strong. Business call revenue grew sequentially, driven by business demand for high bandwidth data services, in its bundled service offerings combining network, CP, software applications and managed services.
CenturyLink’s employees have worked hard to successfully integrate several major acquisitions over the last few years, and the company is believed to be well-positioned now as an industry leader capable of completing more effectively and winning in the marketplace. Over the last couple of years, it has consistently focused on broadband enhancement, present TV expansion, fiber-to-the-tower and managed hosting and cloud services.
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The execution on these strategic priorities is key to its navigating this transformation successfully in 2014 and beyond to drive long-term profitable growth and value for its shareholders.
An increasing number of customers are asking for integrated communications and IT solutions, and CenturyLink is believed to have the strategic asset to provide these services. With respect to business network solutions, it expects to continue to focus on driving growth and in high-bandwidth data services including MPLS, Ethernet, Wavelength and voice-over-IP by providing reliable, secure connectivity to meet the growing bandwidth needs of its business customers and wireless carrier customers.
Its targeted marketing approach, sales programs and the continued expansion of its sales team as well as continued enhancements in its product portfolio continue to position it to drive revenue growth.
It plans to continue to enhance its hosting cloud service platform and expects to have deployed its advanced CenturyLink cloud node to six of its datacenters by year-end, which along with the Tier 3 cloud nodes operating in nine data centers at the time of acquisition will bring it to 15 advanced notes by year-end. It’s further enhancing its ability to compete in the growth of hosting services of its building and leveraging its deep knowledge base on offer to mid-size to large enterprise customers and complete portfolio of IT and cloud enablement services.
A Strong Position
CenturyLink is believed to be well-positioned among its competitors to compete in the hybrid cloud market as it offers the full range of network cloud, managed hosting, colocation and IT services that it believes its customers want. In the consumer segment, it continues to see good results in those markets where it has deployed higher bandwidth and IPTV services.
It continues to monitor the access of Prism TV in its current markets and will consider further market expansion in the months ahead.
Finally, it is focused on driving improved operating efficiency through its network, its simplification and rationalization that should improve its NDN provisioning time and help drive standardization throughout the company. Additionally, it’s focused on process automation improvements through applications and work tools that drive lower operating costs and improved sales efficiency.
The growth in its strategic revenue is primarily driven by strength in high speed Internet, its bandwidth business data services, Prism TV and hosting services. Data integration revenues were higher due to increased CPE sales.
It continues to generate solid growth across the enterprise customer market and eyes an opportunity for further investment in the small- and medium-size business space to improve its market share and drive further growth.
Over time, it expects long-term improvement in both revenue and margin trends across the hosting segment and continues to leverage these assets to drive additional revenue through cross-selling opportunities in its other segments. All these developments make CenturyLink a good buy.