Now that the CenturyLink, Level 3 merger has been completed, the company is pursuing synergies, as Sunit Patel, CFO of the merged company, still known as CenturyLink, explained at an investor conference today. Some of the CenturyLink, Level 3 synergies — including reduced head count and real estate savings — are of the type we typically associate with mergers. Others are unique to the telecom industry.
For example, the new CenturyLink is in the process of moving traffic from connections previously leased from other carriers onto the combined company network. In addition to reducing costs, this has an added benefit, Patel noted: It also takes business away from the competitors who previously supplied the connection.
CenturyLink, Level 3 Synergies
The new CenturyLink that emerged after the merger was completed late last year has a much tighter enterprise focus than the company did before. Level 3 was heavily enterprise-focused and incorporation of that company’s operations has made the new CenturyLink the most tightly enterprise-focused of all major U.S. service providers.
But while Level 3 focused mostly on large enterprises, the merged company will also focus on small- and medium-size businesses, Patel explained.
“The excitement in the sales force is very strong,” he said.
An important trend in the enterprise market is a de-emphasis on MPLS connections in favor of less costly software-defined wide area networks (SD-WANs) – a trend that CenturyLink already has embraced.
CenturyLink sees big opportunities in SD-WAN, Patel said. He added, though, that “the challenge as an industry is how to more quickly enable” these offerings.
“Most customers buy from multiple suppliers” and the “challenge is to enable easy criss-crossing” between suppliers, he said.
Patel also reiterated CenturyLink’s emphasis on making the customer experience more digital and reducing reliance on traditional means of contact such as 800-numbers. As the company makes progress on this front it will see “significant margin expansion,” Patel said.
Patel made his comments at the Morgan Stanley Technology, Media & Telecom Conference today, which was also webcast.
