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CenturyLink CEO: Fiber 'beats wireless, whether that's 5G or not'

CenturyLink Inc.'s future lies in fiber, according to company CEO Jeffrey Storey.

Speaking during an Aug. 7 earnings conference call, Storey said CenturyLink added approximately 5,000 fiber-fed buildings to its on-network footprint in the second quarter, up from the 4,500 new fiber-fed buildings the company added in the first quarter.

By contrast, Level 3, the telecom services provider CenturyLink acquired in 2017, used to add closer to 500 buildings per quarter, Storey said.

"We know that when we have a building on-net, our fiber-based services provide a better, more reliable and higher-margin solution than competing infrastructure," the CEO said, pointing to the copper networks from legacy telecom providers and the hybrid fiber-coaxial cables that many cable operators use.

"And [fiber] beats wireless, whether that's 5G or not. Fiber wins," Storey said. Next-generation 5G wireless service promises to deliver speeds many times greater than current 4G LTE services. Multiple wireless operators have said they plan to use 5G to challenge fixed broadband providers.

Asked by an analyst how long CenturyLink can sustain its current pace of adding buildings to its on-network footprint, Storey said that as long as CenturyLink continues to find buildings that it can profitably build in, it will continue to do so.

"The limiting factor over the long-term will be what types of returns do we get for each of those buildings ... so I can't give a prediction of how long it will last," he said.

In other company news, Storey said CenturyLink's strategic review of its consumer business is progressing well. "With that said ... this will be a lengthy and complex process, and we do not intend to provide updates until we have determined the best path forward," the CEO said, noting that the company has not ruled out any potential outcomes for the review.

"We think that it's important for us to look at all options, including continuing to own and operate it," Storey said.

In the meantime, he said CenturyLink does not intend to modify its consumer investment or operations.

CenturyLink ended the second quarter with approximately 4,750,000 consumer broadband customers, representing a net loss of 56,000 customers from the end of the March quarter. Consumer revenues declined by 8% year over year to $1.42 billion, as growth in broadband revenues was offset by declines in voice and other — particularly video — revenues.

For the company as a whole, total revenue was $5.58 billion in the second quarter, compared to $5.90 billion in the year-ago period.

Net income for the quarter rose to $371 million, or 35 cents per share, up from $292 million, or 27 cents per share, in the prior-year period. Adjusted to exclude integration and transformation costs, among other special items, second-quarter net income totaled $369 million, or 34 cents per share.

The S&P Global Market Intelligence consensus EPS estimate for the period was 31 cents on a normalized basis and 28 cents on a GAAP basis.