Monday, February 7, 2005

Level 3 Reports 30% quarter over quarter growth in IP traffic

Level 3 Communications reported a significant acceleration of IP traffic growth during Q4 2004, saying average traffic per day increased over 30%. Level 3 also noted better than expected growth from its wholesale VoIP business.


The company reported Q4 revenue of $1.05 billion compared to $840 million for the third quarter 2004. Communications revenue was $482 million in the fourth quarter versus $423 million for the previous quarter, and information services revenue was $547 million compared to $392 million for the previous quarter.


The net loss for the fourth quarter 2004 was $77 million, or $0.11 per share, compared to a net loss for the previous quarter of $171 million, or $0.25 per share.


Level 3 continues to see new contract activity across all its top customer segments including PTTs, local carriers, long distance companies, cable companies, systems integrators, content providers and ISPs. Specifically, cable companies continue to turn to Level 3 as an underlying provider of a broad portfolio of services that help enable them to deliver local and long distance phone services to their subscribers.


Communications revenue for the full year was $1.68 billion versus $1.95 billion in 2003. Excluding termination revenue, which is non-recurring, and revenue from our mature, declining managed modem and DSL aggregation business, communications revenue increased by approximately 7 percent during 2004. This increase is from growth in transport and infrastructure services, voice and IP VPN services. Managed modem revenue was $485 million and DSL aggregation revenue was $137 million in 2004.



"Our communications revenue was higher than projected this quarter, in part due to better than expected growth, particularly in our VoIP services," said James Q. Crowe, CEO of Level 3. "While still a relatively small percent of communications revenue, our voice revenue increased over 100 percent in the fourth quarter, primarily from our wholesale VoIP services. Additionally, we experienced an acceleration of IP traffic growth on our network during the quarter, and average traffic per day increased over 30 percent sequentially."



"Undeniably, the telecom industry environment remains challenging. In recent years, industry-wide price compression has ranged from 25 percent to 50 percent per annum for transport and IP services, which has basically offset strong unit growth in demand for those services. In addition, ongoing reinvestment in network infrastructure has been required to accommodate increases in traffic volume. At the same time, we believe price compression trends are not sustainable over the longer term."http://www.level3.com

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