Lumen Technologies Looks To The Network Edge As Enterprise, SMB Sales Slip

Formerly CenturyLink, Lumen Technologies is investing heavily on edge computing and next-generation networking services. The carrier is also eliminating its SMB reporting segment and breaking its enterprise segment out to include a midmarket enterprise and large enterprise segment.

Lumen Technologies, formerly known as CenturyLink, is looking to its cloud-based platform to support edge networking and next-generation applications as a big driver of the company’s aspirational growth.

The carrier spent the last several years building out the Lumen platform, which brings together global networking, cloud edge computing, security expertise and collaboration services, and now it’s time to deliver to its customers, especially as businesses grapple with new working environments and an influx of data, according to Jeff Storey, Lumen’s president and CEO.

“The launch of the Lumen platform sets a strong foundation for growth … I’m excited about the growth it can enable,” Storey told investors during the company’s fourth-quarter 2020 earnings call on Wednesday evening.

Lumen will also be leaning on strategic relationships with its technology partners, such as Zoom, SAP, and VMware, to help the carrier bolster its platform and grow, Storey said.

For example, Lumen Technologies earlier this month built on its existing relationship with VMware with a promise to bring more edge computing, work from anywhere, and security solutions to the market as businesses grapple with application management in the new remote working environment. “We expect to work with VMware to bring new services to market though our joint innovation,” he said.

[Related: Lumen Technologies Ups Partner Payouts Via Policy Update: Exclusive]

Monroe, La.-based Lumen generates about three-quarters of its revenue from business services, a segment that had been stressed in recent quarters because of declining small- and midsize-business revenue and the impact of the COVID-19 pandemic on business buying trends and infrastructure needs.

Lumen’s “bread and butter” enterprise segment that includes the company’s high-bandwidth data services, managed services and SD-WAN services, saw a slight decline of .6 percent during the quarter with revenues of $1.430 billion compared with $1.434 billion in 2019’s fourth quarter. Lumen’s enterprise segment, which accounted for 28 percent of the company’s revenue, dipped by .46 percent for the full year.

SMB sales, which accounted for 12 percent of the carrier’s overall business, continued its downward trajectory, slipping 7.1 percent during the quarter to $618 million compared with $665 million in third-quarter 2019.

“Our turnaround for the SMB segment was impacted by pandemic,” said Lumen CFO Neel Dev, noting that despite the macro challenges, the carrier is focused on improving revenue trajectories in its business segments.

Wholesale revenue also continued to slump during the third quarter, falling 6.2 percent to $922 million from $983 million in the year-ago quarter.

Wholesale accounted for 18 percent of Lumen‘s revenue during the final fiscal quarter, the consumer segment brought in 25 percent, and the International and Global Accounts Management (IGAM) segment pulled in 17 percent of the revenue.

Lumen revealed that due to business buying trends that emerged in 2020, the carrier will be further breaking out its enterprise segment to include a midmarket enterprise segment and a large enterprise segment. The wholesale and iGAM segments will remain in-tact, but the SMB reporting segment will be eliminated.

For the fourth quarter that ended on Dec. 31, Lumen reported net income of $522 million compared to $352 million in the same quarter a year ago. The company reported total revenue of $5.13 billion and diluted earnings per share of 48 cents, a 3.5 percent decline compared with $5.31 billion and 33 cents per share in Q4 2019. Net Income was $522 million for the fourth quarter 2020, a 32 percent gain compared to $352 million for the fourth quarter 2019.

Lumen’s overall revenue for the full year 2020 declined 3.4 percent from $21.46 billion to $20.71 billion in Q4 2020.