Level 3's communications revenue for Q1 2007 increased 25 percent to $1.037 billion, versus $830 million for the previous quarter. Communications revenue increased primarily as a result of the inclusion of the results of the Broadwing acquisition and growth in Core Services revenue, offset by declines in other communications services revenues and SBC Contract Services revenue. The company recognized less than $1 million in termination revenue in its Core Communications Services revenue during the first quarter 2007, compared to $8 million in termination revenue during the fourth quarter 2006.
Core Communications Services revenue, which includes transport and infrastructure, IP and Data, Voice and Vyvx services, increased quarter over quarter by 41 percent. The increase was due to the benefit of revenue from Broadwing and the Content Distribution Network (CDN) business and growth in voice, colocation and IP services. Excluding the benefit of revenue from Broadwing and the acquired CDN business in the first quarter and $8 million of termination revenue in the fourth quarter 2006, Core Communications Services revenue increased approximately 3 percent in the first quarter.
In the first quarter 2007, the percent of Core Communications Services revenue by each market group was as follows:
- Wholesale Markets Group -- 58 percent, with strong customer demand coming primarily from cable and wireless service providers.
- Business Markets Group -- 26 percent, with a focus on selling on-net core services to enterprise customers with advanced network needs.
- Content Markets Group -- 10 percent, including the benefit of acquired CDN revenues, as well as continued demand from internet and portal customers, broadcast service providers and satellite companies.
- European Markets Group -- 6 percent, with continuing demand from content, cable and carrier customer segments.