Qwest suitor CenturyTel’s net income triples on Embarq deal, beats Wall Street estimate
By APWednesday, May 5, 2010
CenturyTel 1Q net income triples on Embarq deal
MONROE, La. — CenturyTel Inc., the phone company that is buying Qwest, on Wednesday reported sharply higher net income for the first quarter, topping Wall Street estimates, and said it added more broadband customers while losing fewer phone subscribers.
In morning trading, CenturyTel shares rose 33 cents to $34.40.
CenturyTel, which brands itself as CenturyLink, said its net income more than tripled to $253 million, or 84 cents per share, in the first three months of the year, compared to $67 million, or 67 cents per share, a year ago. Most of the increase was due to the acquisition of Embarq Corp. last year, which tripled the company’s size.
Excluding items, adjusted earnings were 93 cents per share. Analysts expected 86 cents per share and typically exclude one-time items.
Revenue rose to $1.8 billion from $635 million a year ago and narrowly beat Wall Street forecasts of $1.79 billion.
Two weeks ago, CenturyTel agreed to buy larger phone company Qwest Communications International Inc. for about $10 billion in stock. CenturyTel’s stock has declined since the merger announcement, making the deal less attractive to Qwest shareholders.
If approved by regulators, the deal would close next year.
Both companies are dealing with the rapid loss of phone lines, as consumers opt to rely on their cell phones, or sign up for phone service from cable companies. Together, they would be able to cut costs to better keep pace with the falloff in business.
Comparing CenturyTel’s results to the combined results of Embarq and CenturyTel a year ago, income from continuing operations fell 1.1 percent and revenue fell 6.7 percent.
CenturyTel raised its financial forecast for the year, based on favorable customer trends it saw in the first quarter. It said it now expects earnings of $3.20 to $3.30 per share, a range 10 cents higher than the previous estimate. Analysts had been expecting $3.24 per share.
The company, based in Monroe, also said it expects a 6.5 percent to 7.5 percent revenue decline for the year, a percentage point less than in its previous forecast. Analysts were expecting a 7.9 percent decline.
