0
Safe Harbor Statement

Some of the statements made in this presentation are forward looking in nature. These
statements ar...
Presentation Summary




           • Company Overview

           • Financial Overview




                              ...
Company Overview


• Level 3 is a premier, international
  provider of voice, data and video
  transport services

• The c...
Level 3’s Network Connects Directly To Customer Facilities



• Combines metro and intercity
  components                 ...
The Level 3 Network

   • Over $25B of total gross PP&E 1

   • Optimized for optical and IP
       services

   • 54,000 ...
Communications Services



   Core Network                  Wholesale                       Other
     Services           ...
Level 3 Core Network Services



• Integrated set of optical and IP
  services with ~80%
  incremental gross margins
     ...
Pricing & Demand

    The Market Environment For Core Network Services
                    Remains Positive

             ...
Customer Groups

         Level 3’s Business Groups Serve The Needs Of A
                    Premier Group Of Customers

 ...
Communications Services Revenue
 1Q10 Actuals




                           Communications
                              ...
Communications Revenue


     • Revenue from 2005-2008                                                                 $4,...
Sequential CNS Growth


     4.0%                           3.5%              3.4%
     2.0%                2.9%
         ...
Stable Gross and EBITDA Margins




                                 Q108        Q208         Q308          Q408        Q1...
Level 3’s Debt Maturity Profile

    • Repaid the remaining $111 million of the outstanding 6% Convertible
      Subordina...
Financial Leverage


• Gross Debt/Adjusted EBITDA 7.2X exiting 2009
• Targeting leverage ratio of 3X to 5X



      20.0x
...
Summary

• Positive momentum with improvements in sales and churn


• Core Network Services revenue has stabilized over th...
Informational investor roadshow_presentation_june_2010
Informational investor roadshow_presentation_june_2010
Upcoming SlideShare
Loading in...5
×

Informational investor roadshow_presentation_june_2010

393

Published on

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
393
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
1
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Transcript of "Informational investor roadshow_presentation_june_2010"

  1. 1. Safe Harbor Statement Some of the statements made in this presentation are forward looking in nature. These statements are based on management's current expectations or beliefs. These forward looking statements are not a guarantee of performance and are subject to a number of uncertainties and other factors, many of which are outside Level 3's control, which could cause actual events to differ materially from those expressed or implied by the statements. The most important factors that could prevent Level 3 from achieving its stated goals include, but are not limited to, the current uncertainty in the global financial markets and the global economy; disruptions in the financial markets that could affect Level 3's ability to obtain additional financing; as well as the company's ability to: increase and maintain the volume of traffic on the network; successfully integrate acquisitions; develop effective business support systems; defend intellectual property and proprietary rights; manage system and network failures or disruptions; develop new services that meet customer demands and generate acceptable margins; adapt to rapid technological changes that lead to further competition; attract and retain qualified management and other personnel; and meet all of the terms and conditions of debt obligations. Additional information concerning these and other important factors can be found within Level 3's filings with the Securities and Exchange Commission. Statements in this presentation should be evaluated in light of these important factors. Level 3 is under no obligation to, and expressly disclaims any such obligation to, update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise 2
  2. 2. Presentation Summary • Company Overview • Financial Overview 3
  3. 3. Company Overview • Level 3 is a premier, international provider of voice, data and video transport services • The company’s services are purchased by the world’s largest and fastest growing consumers of communications services • The company’s services are primarily offered over its combined long distance and metro network • On net services are an increasingly important competitive differentiator 4
  4. 4. Level 3’s Network Connects Directly To Customer Facilities • Combines metro and intercity components Office Building Tower • Connects to thousands of customer facilities • Over 300 of the Fortune 500 • Thousands of mid-market enterprises Cable Headend Level 3 Metro Data Center • 13 of the top 16 U.S. cable Building Networks companies • The top U.S. broadcast networks • 19 top 20 telecom carriers Level 3 Intercity Network Central Office • 5 of the top 5 U.S. wireless providers • The biggest social networking sites • More than 35 federal agencies 5
  5. 5. The Level 3 Network • Over $25B of total gross PP&E 1 • Optimized for optical and IP services • 54,000 intercity route miles • 27,000 metro route miles • Approximately 8,000 buildings on net • 125 metro fiber markets • Over 100,000 enterprise buildings within 500 ft of US network 1. Based on estimated original cost 6
  6. 6. Communications Services Core Network Wholesale Other Services Voice Services Services • Managed for revenue • Managed for margin • Declining legacy and growth contribution acquired revenue • Includes infrastructure, • Includes voice • SBC Contract and data, content delivery termination and toll free Internet dial-up access and local voice services services • Our combined LD and • Our local connections • Less than 5% of 1Q10 metro networks are a are a competitive communications revenue competitive advantage advantage 7
  7. 7. Level 3 Core Network Services • Integrated set of optical and IP services with ~80% incremental gross margins Local Voice CDN Services • Services from basic building Services blocks to feature rich voice Data Services and content distribution services Transport Services Infrastructure Services • Addresses full range of needs for service providers, enterprises and content owners 8
  8. 8. Pricing & Demand The Market Environment For Core Network Services Remains Positive Infra- Data Local Transport structure Services Voice 1 2 Pricing Trend Demand Trend 1. High speed IP and CDN services 2. VPN Services 9
  9. 9. Customer Groups Level 3’s Business Groups Serve The Needs Of A Premier Group Of Customers Representative Customers Wholesale 49% Large Enterprise and 19% Federal Mid-Market 22% European 10% Note: Percentages are of 1Q10 Core Network Services Revenue 10
  10. 10. Communications Services Revenue 1Q10 Actuals Communications $900M Core Network Wholesale Voice Other $701M $165M $34M ΔGM ~80% ΔGM ~30% ΔGM ~80% ΔGM= Incremental Gross Margin 11
  11. 11. Communications Revenue • Revenue from 2005-2008 $4,199 $4,226 includes organic and ($ millions) $3,695 $3,600 acquisition growth $3,311 • Over the longer term, $1,516 expect to return to growth as customers return to historic buying patterns 2005 2006 2007 2008 2009 2010E Note: 2010 estimated revenue based on 1Q10 Total Communications Revenue of $900 million, annualized 12
  12. 12. Sequential CNS Growth 4.0% 3.5% 3.4% 2.0% 2.9% 2.1% 0.7% 0.0% 0% -0.8% -0.7% -2.0% -0.9% -0.8% -3.0% -4.0% -6.0% -7.1% -8.0% 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 • Backing out a $7 million asset sale in the first quarter, expect Core Network Services revenue to grow sequentially for the rest of 2010 Note: Revenue Excludes Vyvx Ads Business 13
  13. 13. Stable Gross and EBITDA Margins Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409 Q110 Communications $1,066 $1,072 $1,054 $1,034 $962 $926 $901 $906 $900 Revenue Gross Margin % 57% 59% 60% 60% 60% 59% 59% 60% 59% Communications $205 $253 $257 $272 $249 $230 $215 $216 $200 EBITDA EBITDA % 19% 24% 24% 26% (1) 26% 25% 24% 24% 22% EBITDA-CapEx % 9% 14% 13% 16% (1) 18% 16% 16% 15% 13% (1) Communications Adj. EBITDA for the fourth quarter excludes the net $52M benefit from the 4Q08 Adjustments 14
  14. 14. Level 3’s Debt Maturity Profile • Repaid the remaining $111 million of the outstanding 6% Convertible Subordinated Notes, at maturity • Repurchased an additional $7 million of debt due in 2010 and 2011 in the open market • After the end of the quarter, the company issued a redemption notice for $172 million of 10% Convertible Senior Notes due May 2011 ($ millions) $2,930 $695 $775 $700 $640 $196 $294 $38 2010 2011 2012 2013 2014 2015 2016 2017 2018 Pro forma for redemption of $172 million 10% Convertible Senior Notes, due in 2011 Note: Figures exclude headquarters mortgage and capital leases of $100M 15
  15. 15. Financial Leverage • Gross Debt/Adjusted EBITDA 7.2X exiting 2009 • Targeting leverage ratio of 3X to 5X 20.0x 15.0x 10.0x 5.0x 0.0x 2005 2006 2007 2008 2009 Target 16
  16. 16. Summary • Positive momentum with improvements in sales and churn • Core Network Services revenue has stabilized over the last two quarters • Expect sequential growth in Core Network Services revenue for rest of 2010, excluding $7 million asset sale in the first quarter • Continued improvement in debt maturity profile • Since the end of 2009, debt maturities in 2010 & 2011 have decreased from $522 million to $234 million • Only $38 million in maturities due in the next 12 months • Extended $550 million of debt maturities from 2013 to 2018 17
  1. A particular slide catching your eye?

    Clipping is a handy way to collect important slides you want to go back to later.

×