Telecom Ramblings  Oct 10  Comment 
As we enjoy the turning of the leaves, at least where I am, here is a quick rundown of other news from this week that I didn't get to: Cox Business has completed a big metro fiber buildout for the Navy out in Southern California.  They've...
Telecom Ramblings  Oct 9  Comment 
In a their proxy filing a couple weeks ago with the SEC, tw telecom gave the usual detailed look at the sale process. And indeed, there were others who kicked the tires and made bids, as noted by Channel Partners the other day. But I have to say,...
Market Intelligence Center  Oct 9  Comment 
Wednesday’s trading in Level 3 Communications Inc (LVLT) gives options traders an opportunity for a 5.26% return. By selling the Dec. '14 $42.00 call and buying the Jan. '16 call at the $15.00 level for a net debit of $25.65, traders will book a...
Motley Fool  Oct 6  Comment 
This under-the-radar catalyst could be huge for Level 3 Communications, creating a market north of $100 billion where Level 3 will become a key supplier.
Benzinga  Oct 6  Comment 
Level 3 Communications, Inc. (NYSE: LVLT) today announced that Level 3 Financing, Inc., its wholly owned subsidiary ("Level 3 Financing"), has begun the marketing of a new senior secured tranche under its existing senior secured credit facility...
Telecom Ramblings  Sep 18  Comment 
There's an article over at Investors Business Daily suggesting that Sprint may sell its wireline network business at last, and that Level 3 would be the most likely buyer. It's not a new idea of course, but in this iteration is being suggested by...
Telecom Ramblings  Sep 11  Comment 
Here are a few quick-takes on news from the metro and regional fiber space: Down in Georgia, Verizon Wireless has tapped a regional backhaul specialist for some small cell help. Tower Cloud has been assisting with a deployment of the new...
TheStreet.com  Aug 27  Comment 
NEW YORK (TheStreet) --aLevel 3 Communications was gaining 2.7% to $44.19 Wednesday following an upgrade to "outperform" from "neutral" by Macquarie. The analyst firm set a price target of $51 for the company. Level 3 has "set conservative...
Benzinga  Aug 27  Comment 
Kevin Smithen of Macquarie Research upgraded shares of Level 3 Communications (NYSE: LVLT) to Outperform with a $51 price target which was raised from a previous $49. The analyst believes that Level 3 is the best pure-play on thematic and...
StreetInsider.com  Aug 27  Comment 
UPGRADES Canaccord Genuity upgrades Rent-A-Center (Nasdaq: RCII) from Hold to Buy with a price target of $32. TD Securities lifts Bank of Montreal (NYSE: BMO) from Hold to Buy with a price target of Cdn$88. Click Here for more color. Macquarie...


Level 3 Communications (NYSE: LVLT) is a provider of a range of integrated communications services including network and Internet services, colocation service, media services and voice services. Its operations are divided into communications and coal mining.[1] Its largest segment, communications, consists of Core Network Services, Wholesale Voice Services, and Other Communications Services.[2] Its operations are primarily located in North America and Europe. As the demand for online video, gaming, and the streaming of movies and live events continues to rise, providers of these services are striking long-term contracts to IP Upstream carriers. Reaching deals with streaming companies has been critical to Level 3’s revenue growth. [3]

Business Growth

Level 3 reported a loss of $622 on $3.65 billion in 2010 revenues, compared to a loss of $618 million on $3.76 billion in revenues in 2009.[4] The declines in profitability and revenues can be partially attributed to a decline sales from large companies. In addition, expenses have risen as a result of high interest costs associated with the company’s debt load. However, contracts with companies providing streaming services has the potential of providing new sources of revenue growth.[5]

Trends and Forces

Visual streaming services provides new growth area for diversified communications companies

Increases in consumer demand for online video, online gaming, streaming full-length movies and lives events has the potential of providing significant growth opportunities for communication services providers. In 2010, Americans spent as much time online as they did watching TV, and Level 3 expects that the amount of time spent streaming online to increase.[6] Level 3’s broadcast services network and Vyvx capabilities delivered approximately 15,000 video feeds month as well as major live events like the Super Bowl, which the network has delivered for the past 22 years. In 2010, Level 3 Communications’ IP Upstream service was selected to be a primary content delivery network (CDN) for Netflix's fast-growing streaming service.[7] However, this rapid growth is not without its costs. Level 3 says it will double its storage capacity to help accommodate the new contract. Expanding its services has the potential of forcing the company to increases its debt load, which would lead to significantly higher costs.[8]

Global Economic Crisis has forced many customers to cut or delay several communication services

In an effort to control or reduce costs, many of Level 3’s customers have deferred or foregone purchases of services.[9] In addition, customers have also had trouble making periodic payments. As a result, there has been a decline in demand for communication services, which has resulted in lower revenues for Level 3. Meanwhile, utility costs have remained relatively stable for communication companies, leading to tighter margins.[10] However, as the result of a gradual pick up in economic activity, Level 3’s profit margins on the Core Network Services have improved.[11] Increased economic activity has the potential of leading to increased revenues and profits on Level 3’s core operations.[12]

Telecommunications Companies

While rising demand for IP Upstream services provides a new growth opportunity, a slow economic recovery has led to decline in demand for many other services provided by diversified communication companies. In addition, competition for fewer contacts for many networking services has led to depressed margins.

LVLT's top three competitors in telecommunications are:[13]


  1. Reuters.com: Company profile for LVLT
  2. Reuters.com: Company profile for LVLT
  3. LVLT Company 10-K for 2010
  4. Morningstar.com: financials for LVLT
  5. LVLT Annual Report for 2010
  6. LVLT Annual Report for 2010
  7. Yahoo! Finance: Netflix/Level 3 Deal Underscores Communication Service Trends
  8. Yahoo! Finance: Netflix/Level 3 Deal Underscores Communication Service Trends
  9. Yahoo! Finance: Netflix/Level 3 Deal Underscores Communication Service Trends
  10. Yahoo! Finance: Netflix/Level 3 Deal Underscores Communication Service Trends
  11. Yahoo! Finance: Level 3 1Q loss narrows
  12. Yahoo! Finance: Level 3 1Q loss narrows
  13. Hoovers: LVLT Competitor Fact Sheet. Retrieved on June 20, 2008.
  14. WikInvest: Sprint Nextel. Retrieved on June 26, 2008.
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