CenturyLink, Inc. (CTL)
Q42012 Earnings Call
February 13, 2013 5:00 pm ET
Tony Davis - Vice President of Investor Relations
Glen Post - President, Chief Executive Officer, Director
Stewart Ewing - Chief Financial Officer, Executive Vice President
James Ousley - President of Enterprise Markets Group, Chief Executive Officer of Savvis Operations
Karen Puckett - Chief Operating Officer, Executive Vice President
Michael McCormack - Nomura
Batya Levi - UBS
Simon Flannery - Morgan Stanley
Frank Louthan - Raymond James
Phil Cusick - JPMorgan
Tim Horan - Oppenheimer
Scott Goldman - Goldman Sachs
David Barden - Bank of America
Nicole Black - Wells Fargo
Donna Jaegers - D.A. Davidson
Tom Seitz - Jefferies
Good day, ladies and gentlemen, and welcome to CenturyLink's fourth quarter 2012 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time. (Operator Instructions) As a reminder, this conference call is being recorded.
I would now like to turn the call over to Mr. Tony Davis, Vice President of Investor Relations. Mr. Davis, you may begin.
Thank you, Saeed. Good afternoon, everyone, and welcome to our call today to discuss CenturyLink's fourth quarter and full year 2012 results and our capital allocation changes released earlier this afternoon. The slide presentation we will be reviewing during the prepared remarks portion of today's call is available in the Investor Relations section of our corporate website at ir.centurylink.com. At the conclusion of our prepared remarks today, we will open the call for Q&A.
As you move to slide two, you will find our Safe Harbor language. We will be making certain forward-looking statements today, particularly as they pertain to guidance for first quarter and full year 2013, the integration of Qwest and Savvis, our capital allocation changes and other outlooks in our business. We ask that you review our disclosure found on this slide as well as in our press releases and in our SEC filings, which describe factors that could cause our actual results to differ materially from those projected by us and our forward-looking statements.
We ask that you also note that our earnings release issued earlier this afternoon and the slide presentation and remarks made during this call contain certain non-GAAP financial measures. Reconciliations between the non-GAAP financial measures and the GAAP financial measures are available in our earnings release and on our website at www.centurylink.com.
Now turning to slide three, your host on today's call is Glen Post, Chief Executive Officer and President of CenturyLink. Joining Glen will be Stewart Ewing, CenturyLink's Chief Financial Officer; and also available during the question-and-answer period of today's call will be Karen Puckett, CenturyLink's Chief Operating Officer; Bill Cheek, President of Wholesale Operations, and Jim Ousley, Chief Executive Officer of Savvis.
Our call today will be available for telephone replay through February 20, 2013, and accessible by webcast through March 6, 2013. Anyone listening to a taped or webcast replay or reading a written transcript of this call, should note that all information presented is current only as of February 13, 2013 and should be considered valid only as of this date regardless of the date heard or viewed.
As we move to slide four, I will now turn the call over to your host today, Glen Post. Glen?
Thank you, Tony. Good afternoon, everyone and thank you for joining us today to discuss CenturyLink's fourth quarter and full year 2012 results. We will also provide guidance for the first quarter and full year 2013 as well as other important updates about our business. We are pleased with our fourth quarter and full-year results and we continue to make good progress on a number of fronts.
Starting on slide five, I would like to highlight the progress CenturyLink made in 2012 towards achieving the goals we set a year ago. Our top line pro forma revenue trend continued to improve in 2012 with an annual revenue decline of 1.7%, compared to 3.8% decline in pro forma 2011 and an estimated 5.6% decline in pro forma 2010. This continued improvement is driven by strength in our strategic products, including high-speed internet, Prism TV, high-bandwidth, our data services to enterprise customers and wholesale customers, and our hosting services.
For full year 2013, we believe we will reduce our annual revenue rate of decline to the 0.5% to 1.5% range and we expect to reach revenues stability in 2014. While we continue to face declines in legacy services, we believe we have the right asset mix in place to stabilize our top line and grow revenues over time.
Continuing onto this slide six. During the year we achieved strong improvement in access line loss and continued the subscriber growth in broadband and Prism TV services. We added over 196,000 broadband subscribers and nearly 45,000 Prism TV subscribers during the year.
The Enterprise Markets network segment during 2012, we grew recurring revenue for four consecutive quarter, driven by strength in high-bandwidth data services revenue. In addition, we made continued progress on the Fiber-to-the-tower initiative completing over 4,500 fiber builds during 2012, ending the year with approximately 14,700 within our territory.
During 2012, we continued to expand the global reach of our colocation and managed services, adding three new data centers expanding available space and for existing data centers. Also in December, we launched savvisdirect, our simplified approach to cloud computing for both, small and large businesses.
During 2012, we increased our operating expense synergy target related to Qwest acquisition from $575 million to $650 million, and we are pleased with our synergy achievement throughout last year as we ended 2012 with an annual synergy run rate of $480 million.
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