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CenturyLink fielding JV, sale offers for data center business, CEO says


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CenturyLink fielding JV, sale offers for data center business, CEO says

expects to havemore clarity on options for its data center and colocation business in the nextcouple weeks, with offers regarding a possible sale or joint venture coming due,CenturyLink President and CEO Glen Post III said.

Whilemost of the parties inquiring about the business were interested in a sale, CenturyLinkalso expects to review some joint venture proposals, the executive said. The offersare a result of a strategic review process that CenturyLink launched last year.

As far as the company's plans for any proceeds, CFO R. StewartEwing Jr. said CenturyLink may use the funds to repay debt, to buy back shares orto invest in its business, perhaps by increasing network speeds.

CenturyLinkon May 4 reported first-quarter net income of $236 million, or 44 cents per share,up from $192 million, or 34 cents per share, in the year-earlier period. Excludingspecial items, the company reported adjusted net income for the quarter of $248million, or 46 cents per share, compared to $226 million, or 40 cents per share,in the prior-year period.

The S&PCapital IQ consensus estimate for the just-ended quarter was 68 cents per shareon a normalized basis and 43 cents per share on a GAAP basis.

Operatingrevenues for the first quarter decreased 1.1% to $4.40 billion from $4.45 billiona year earlier. The company attributed the change primarily to declines in voiceand long distance revenues, low-bandwidth data services revenues and data integrationrevenues, partially offset by the increases in business high-bandwidth data servicesrevenues, consumer high-speed Internet and Prism TV revenues.

Lookingahead to the second quarter, CenturyLink forecast operating revenues to be in-linewith first-quarter revenues mainly due to anticipated growth in data integration,high-bandwidth services, and high-speed Internet and Prism TV revenues, offset byexpected declines in legacy and low-bandwidth data services revenues. The companyexpects a sequential decline in second-quarter operating cash flow due to higherseasonal cash expenses.

Askedto elaborate on the higher cash expenses, Dean Douglas, the company's presidentof sales and marketing, attributed some of the pressures on the business to "aslight adjustment in strategy," focusing more on bundled broadband servicesas opposed to just broadband.

"Thatpivot to the more traditional approach to high-speed bandwidth in the consumer segmentespecially should allow us to have customers … less precluded to churn and a higherARPU," Douglas said.

The companyshould see more benefit from that shift in the second half of this year and in 2017,he added.