The first year of the new century promises to be the one in which Level 3 Communications attempts to survive the punishment of the capital markets and wring revenue from its own network.
The company just completed its all-fiber network that covers 16,000 miles in the U.S. and over 3,000 miles in Europe. Each and every mile of the network is populated by 12 conduits, which will allow for easier technology upgrades as improvements emerge.
“Until the last few years, conventional wisdom said that if you had fiber in the ground you were set for life,” says Senior Vice President Ron Vidal. “Thats no longer true. Its now a question of who can integrate new generations of fiber into the ground and take advantage of those cost savings.”
The company is also hoping that a strong balance sheet will aid its success. Earlier this year, the company sold stocks and bonds, and today has $5 billion in cash. “At the time, people looked at us like we were nuts,” Vidal says. “Today, though, capital is the scarcest commodity of all.”
CEO James Q. Crowe had promised Wall Street that revenue would double to $2.5 billion in 2001. But in April, the carrier was punished severely when it trimmed $1 billion from the 2001 forecast and pared down its $2.9 billion projection for 2002 to between $2.3 billion and $2.5 billion.
In the coming months, Level 3 is betting that communications companies will be looking to outsource their networks. “When we look at the big communications franchisers, we realize that, if nothing else, the capital market has forced them to rethink their business models,” Vidal says.