CenturyLink CEO crows about feeding Chick-fil-A fiber

CenturyLink CEO Jeff Storey is an admitted fan of Chick-fil-A's fare, but perhaps even more so now that it’s a fiber customer.

During CenturyLink's third quarter earnings call on Wednesday, Storey used Chick-fil-A as an example of how his company's fiber strategy is paying off.

"Before I get into the details, I have to say that personally I'm an avid fan of Chick-fil-A," Storey said, according to a Seeking Alpha transcript of the earnings call. "It certainly starts with liking the food, but I also appreciate the way they've integrated technology into providing a superior customer experience.

"To even further enhance that customer experience, Chick-fil-A required increased bandwidth capabilities at their restaurants, which we supported with fiber investments to hundreds of locations nationwide. Fiber connectivity is a foundational component of the Chick-fil-A digital strategy, and is enabling many of their smart restaurant initiatives. We continue to work with this customer to support their future digital requirements."

For the quarter, CenturyLink added approximately 4,900 new fiber-fed buildings, bringing the year-to-date total to roughly 14,500. CenturyLink added 5,000 new fiber-fed buildings in the second quarter of this year, compared to 4,500 in the first quarter. 

RELATED: CenturyLink extends fiber reach in U.S., Europe

CenturyLink has highlighted its fiber-build out this year, which includes deploying 4.7 million miles of fiber across the company's intercity networks in the U.S. and Europe. CenturyLink has been positioning itself as fiber-first company, and those fiber benefits reverberated across the company during its third quarter. Storey said CenturyLink's fiber investments were particularly relevant to the small and medium-sized businesses that are located in the fiber-lit buildings.

"Our sales team is focused on leveraging these investments both within and beyond our legacy LEC footprint," Storey said. "Utilizing the entire CenturyLink fiber footprint, our team is intent on becoming a major provider to SMB customers throughout the U.S. I'm excited about the opportunities for SMB and expect improved performance in the future."

RELATED: CenturyLink draws up its playbook for edge compute services

Along with the fiber expansion, CenturyLink announced in August its blueprint for edge compute services to serve enterprise customers, cloud providers, system integrators, and wireless carriers. During that announcement, CenturyLink said it had booted up more than 100 initial edge compute locations across the U.S. to provide a range of managed services and hybrid cloud solutions to its customers. The edge compute services blend compute, storage and networking capabilities into one package.

On Wednesday's earnings call, Storey said those edge efforts are also starting pay off.

"We've already begun closing sales of this newly enabled offering with recently closed a deal to support a global edge computing solution for an IT-intensive securities trading customer," Storey said. "Our edge computing capabilities enable the customer to move trading system workloads closer to the digital interactions with other trading platforms all over the world."

Storey said that fiber was the long-term winner when compared to copper, hybrid fiber-coax, wireless or even 5G. He also offered up his own version of "there's no wireless without wired networks."

"We all spend a lot of time talking about wireless, and it certainly has its place in the last few hundred feet, but there is no scalable communications technology where fiber is not the true underlying infrastructure," he said. "Wi-Fi, private LTE, 4G all go back to fiber as quickly as possible. In fact, the key enabling technology for 5G will be the continual densification of our own fiber infrastructure."

For CenturyLink's wholesale and enterprise customers, Storey said the "scalability, the reliability and affordability of fiber is unmatched by wireless, free space optics, microwave, HFC or any other transport technology you can name."

"We will continue to invest in being the preferred provider of direct fiber-based solutions," Storey said.

Driven in part by its continued investment in faster fiber-optics, CenturyLink spent $957 million on capital expenditures in the third quarter, up from $684 million a year ago.

RELATED: CenturyLink snaps up OTT video delivery vendor Streamroot

Storey said the third key leg of CenturyLink's strategy was the build up of its content delivery network, which he said was boosted by the September deal to buy OTT video distributor Streamroot for an undisclosed sum.

CenturyLink's 3Q numbers

In the third quarter, CenturyLink had a net loss of 36,000 broadband subscribers, which exceeded Wells Fargo Securities' estimate of 20,000. While CenturyLink's subscriber losses were mostly from the lower tiers, it added 54,000 subscribers for the tiers with speeds of 100 Mbps or above.

Total revenue in the third quarter declined 3.6% to $5.606 billion compared to declines of 5.5% in the second quarter and 5% in the first quarter. CenturyLink posted quarterly earnings of $0.31 per share, just missing analysts' estimates of $0.33 per share.

"As we have written in the past, we believe the CenturyLink story will continue to improve as it invests the capital in the 'good' (non legacy) segments of its business," according to a research note by Wells Fargo Securities. "Q3 results offer further evidence management is doing just that."

Revenue from international and global accounts increased by 1%, while revenue from the small and medium business division declined by 6%. Enterprise revenue increased 3% year-over-year. Revenue from wholesale dropped by 7%, while the consumer sector fell by 9%.

“Year-to-date, Adjusted EBITDA grew compared to the same period in 2018, driven by our continued focus on profitable revenue and cost transformation initiatives,” said Neel Dev, CenturyLink’s executive vice president and chief financial officer, in a statement. “We are pleased with our solid performance and are reiterating all of our financial outlook measures for the full year 2019.”