CenturyLink CEO: SMB Opportunity Abound Post Level 3 Integration

CenturyLink has a big opportunity to sell to SMBs outside its legacy footprint, and to meet growing demand for more capacity and more locations with greater flexibility, higher security and management of cloud applications.

That’s what Jeff Storey, CenturyLink’s president and CEO, said during this week’s Goldman Sachs 28th Annual Communacopia Conference. For its second quarter, CenturyLink reported nearly $5.6 billion in revenue, compared to $5.9 billion for the year-ago quarter. Profit was $371 million, up from $292 million for the year-ago quarter.

Prior to being acquired by CenturyLink, Level 3 Communications never targeted SMB customers, he said.

CenturyLink’s Jeff Storey

“We have a lot of business buildings on that, which have small business customers in it, but we never sold to them … that was not part of [Level 3’s] market focus,” Storey said. “It is a part of the CenturyLink business plan. And so, I think there’s great opportunity for us to take the capabilities that we’ve historically used … and sell those products and services, and capabilities outside of [the] region in the 150,000-plus buildings that we have on that.”

CenturyLink faces challenges with declining revenue from legacy services that customers need and are going to continue to need, he said.

“We also are looking at our product sets and trying to do a better job,” Storey said. “If you look at SD-WAN, we took the best of both SD-WAN capabilities and are trying to make sure that we integrate that in such a way in go-to-market … that it’s really effective for our sales team to grow. But it’s the whole breadth of services; it’s not just SD-WAN. It’s the fact that we have a gradient MPLS solution coupled with our SD-WAN. [And] just the fact that we have great security solutions and managed services solutions. So I think it’s the overall package [and] not any single individual product. It’s the portfolio of products that really allows us to win.”

A big priority for CenturyLink is to get more business customers on-net, as opposed to off-net, he said.

“No. 1, when we have a customer on-net, I can provide better service to that customer, guaranteed, I don’t have a third party involved,” Storey said. “Secondly, we make more money, because we’re no longer paying off-net to somebody else. And third, I don’t fund anybody else’s network build.”

CenturyLink is adding 4,500 to 5,000 buildings quarterly and a “significant portion of that is to make it possible for us to move off-net to on-net,” he said.

“If any customer we have in one of those buildings today is by definition off-net and we want to build that infrastructure in and bring them on-net, it drives revenue because we have the capabilities,” Storey said.