Name of the Company: CenturyLink
Business Sector: Telecommunications
Operating Geography: USA, North America, Global
About the Company: CenturyLink is a telecommunications company with headquarters located in Monroe, Louisiana. The company offers a host of services in its sector which includes network and data management, cloud services, hosting services and IT consulting. The company is currently the third largest provider of telecommunications services in the United States.
Revenue: US$ 17.5 billion (2016)
Competitive Analysis of centurylink
|1. Reputed telecom in North America with more than 55 data centres across North America, Europe and Asia Pacific region|
2. Large spread of high speed fiber optic cables
3. Flexible bundling options
4. One stop solution for its customers
5. Inorganic growth through strategic acquisitions
|1. Declining Net Income and Total Revenue
2. Lack of new products and weak research
3. Expensive FTTH (Fiber To The Home) installation
4. Reliance on various third parties and subsidiaries
|1. Use of emerging digitalization in future |
2. Increase LTE penetration in un-served & underserved rural areas
3. Penetration in international and domestic market for Hybrid IT solutions
|1. Fast growing technology, a threat to traditional services
2. Stiff competition from ILECs, new CLECs and other alternate communication systems
3. Risks in the form of natural disasters
1. Reputed telecom in North America with more than 55 data centres across North America, Europe and Asia Pacific region- CenturyLink is almost 85 years old brand with its offerings in Communications, Network and Data systems management, Big Data analytics and IT consulting. With more than approximately 11.1 million total access line, it is the third largest wire-line telecommunications company in USA. CenturyLink does not own all of its data centres but has gradually gained by strategically acquiring various companies.
2. Large spread of high speed fiber optic cables- CenturyLink has close to 265000 miles of domestic fiber-optic plant which has a high life up to 45 years. Fiber plays a huge role in some of the strategic services of CenturyLink such as broadband and Ethernet services.
3. Flexible bundling options- CenturyLink provides bundling options, by which customers can purchase high speed internet, TV and phone, backed by high speed fiber, DSL and other international transport network. If a customer is planning to shift to a new location, CenturyLink transfers all the services online subject to the availability of the services in the new area.
4. One stop solution for its customers- CenturyLink has approximately 1 Million miles of copper plant and close to 265000 miles of domestic fiber-optic plant. Along with bundling options, its premium product, Prism TV, has attracted a lot of customers with over a 300% growth (2012-2016) thus making it a one stop solution.
5. Inorganic growth through strategic acquisitions- On November 3, 2016, CenturyLink Inc decided to sell their data centers (57) and colocation business to a consortium led by BC Partners and Medina Capital in exchange for cash and a minority stake in the consortium's newly-formed global secure infrastructure company, Cyxtera Technologies, to complete its acquisition of Level 3 Communications. It has done similar acquisitions in the past for acquiring Qwest, Savvis, AppFog, Data Garden and netAura LLC for expanding business.
1. Declining Net Income and Total Revenue- As per the CenturyLink's annual report 2016, the net income has decreased from 878 M $ to 626 M $ with a decline in total revenues of 3 % from 10646 M $ to 10352 M $, due to which the dividends might decline. The company is now raising cash by selling its data centres.
2. Lack of new products and weak research- CenturyLink has a narrow product portfolio because it invests less in Research and Development. The strategy that it adopts is to acquire a company specializing in the area it wishes to expand in.
3. Expensive FTTH (Fiber To The Home) installation- FTTH, the next generation of consumer internet access, gives the customers high bandwidth and low latency as the fiber optic connection can be delivered directly to the residence. The installation of FTTH is expensive and hence, less widely available when compared to other types of services like DSL, cable or fixed wireless. FTTH comes with a comparatively higher monthly cost and if the fiber service is there and hasn’t been lit up, then it fails to appear on the official website in the location.
4. Reliance on various third parties and subsidiaries- CenturyLink is dependent on other communication providers to provide services. It leases network capacity from them or interconnects with their existing infrastructure which leads to deterioration in quality and their change in plans pose risks to the company. Also, most of CenturyLink's operating cash flow and revenue is reliant upon the earnings of subsidiaries, distribution of which is in the form of dividends, loans and other payments
1. Use of emerging digitalisation in future - Consumer behaviour is now being heavily impacted by new technologies. Consumers now have provisions like having a wide range of choices to choose from viewing programming on demand basis or delayed time. They will demand high speed connections for several purposes like communication, entertainment in future and this need has to be fulfilled. Thus to accomplish this, heavy investments to increase network reliability, bandwidth, speed requirements and security should be made to deliver competitive speeds in future.
2. Increase LTE penetration in un-served & underserved rural areas- CenturyLink has over 55 data centres, more than 30000 servers under management, close to three hundred thousand international transport miles and has been continuously under Gartner Magic Quadrant for consecutive 8 years. According to CenturyLink’s estimates, only 15% of the total enterprise servers are outsourced and it wants to target bigger enterprises and customers that have various domestic and international locations.
3. Penetration in international and domestic market for Hybrid IT solutions- CenturyLink has a large untapped market in rural areas and the places which have the 4G LTE coverage experience speeds ranging from 1 Mbps to 3 Mbps, as it can serve upto 10 Mbps in these areas. With its progressive fiber optic cable network, it can deliver broadband services to 1.2 million rural households and enterprises in 33 states over the next few years.
1. Fast growing technology, a threat to traditional services- A major threat are the companies that provide VoIP services over Internet, severely impacting ILEC’s broadband services. Other cable companies deliver faster broadband speeds due to the advanced wireless data transmissions. Technological advancements have enhanced the development of products that pose a serious challenge to CenturyLink’s traditional services. Cable television companies now also deliver telephone service over the same network.
2. Stiff competition from ILECs, new CLECs and other alternate communication systems- CenturyLink faces stiff competition from national providers, technology and cloud companies, cable and satellite companies and companies that lease part of CenturyLink’s network and vice-versa. Another source is the non-carrier systems that bypass the local networks via multiple means like uneven concentration of traffic on the access lines and use of special access.
3. Risks in the form of natural disasters- Various facilities located in coastal states are subjected to natural risks which lead to disrupted services. The company has an insurance policy but the claims cover only a small portion of the entire loss. Also, there are fines imposed by FCC if the customers are prevented from making emergency calls.CenturyLink SWOT analysis has been conducted and reviewed by senior analysts from Barakaat Consulting.
1. Annual Report- http://www.annualreports.com/Company/centurylink-inc 2. Company History- http://news.centurylink.com/company/history 3. An overview of the US telecom industry-http://marketrealist.com/2015/01/overview-us-telecom-industry/ 4. Company Information- http://www.centurylink.com/aboutus/companyinformation/ 5. CenturyLink says hybrid IT service growth remains strong in medium, large-sized businesses- http://www.fiercetelecom.com/telecom/centurylink-says-hybrid-it-service-growth-remains-strong-medium-large-sized-businesses 6. Market Report: https://www.thestreet.com/files/r/ratings/equities/CTL_weiss.pdf
|1. CenturyLink makes direct contributions to support state candidates, political parties, political action committees|
2. CenturyLink engages in lobbying activities to advocate its position on public policy issues.
3. It participates in trade association memberships and related engagements
|1. Increasing penetration of technology has led to preference changes which has resulted in decreasing revenues for CenturyLink
2. The stock prices have depreciated after acquisition of level 3 communication
3. Declining revenues have made it difficult for CenturyLink to offer the quarterly dividends
4. Threat of shares being sold as a measure to make up for the revenue loss
|1. CenturyLink maintains high diversity in spite of multiple acquisitions|
2. The Human Resources policies are aligned to ensure fairness and equal opportunity for all
3. CenturyLink respects unique perspectives of its employees to create the best solutions for its unique customers
|1. CenturyLink provides internet services to more than 37 states
2. CenturyLink offers PrismTv which does not use a satellite dish and hence overcomes the problems of a satellite dish
3. CenturyLink and VMware have brought innovative solutions like CenturyLink Cloud, DCC service, CenturyLink's ElasticBox application management framework
|1. CenturyLink non-compliance to FCC requirements for emergency service could lead to heavy penalty|
2. Regulatory risks and compliance costs increase as legal requirements for foreign and domestic operations conflict
3. FCC set new target for broadband speed as 25 megabits/sec for download and 3 megabits/sec for upload
|1. CenturyLink has adopted a conscious effort to ensure environmental sustainability
2. It has dedicated initiatives like Green Information Technology Program, Waste Minimization and Recycling Program, Carbon Disclosure Project
3. There has been a noticeable reduction in Direct and Indirect CO2 emissions
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Etisalat SWOT and PESTLE analysis has been conducted and reviewed by senior analysts from Barakaat Consulting.