US fixed line operator CenturyLink has confirmed that it has initiated a strategic review of its consumer business and has engaged external advisers to assist with the process. Announcing its 1Q19 results, the telco’s CEO, Jeff Storey, noted: ‘Our consumer business continues to make significant contributions to our profitability and free cash flow and we are performing well where we are investing. We are comfortable operating this business for the long term, but the strategic review will help us better understand whether there are opportunities to better maximise the value of this asset.’
The telco warns that it cannot predict the outcome or timing of this work, whether any transactions will be consummated or, if they are, what the form of those transactions may be. The company does not plan to modify its normal operations or investment patterns in these businesses while it undertakes this review.
CenturyLink reported total revenue of USD5.6 billion for the three months ended 31 March 2019, down from USD5.9 billion in the year-ago period. Consumer revenues shrunk from USD1.6 billion to USD1.4 billion in the same time-frame. Further, the telco reported a net loss of USD6.2 billion for the period under review, compared to a profit of USD115 million in 1Q18. With reference to the deficit, the telco noted: ‘Under Generally Accepted Accounting Principles (GAAP), the company is required to perform periodic impairment tests related to its goodwill asset. The continued decline in CenturyLink’s stock price during the first quarter was considered a triggering event requiring completion of a goodwill impairment analysis. Based on this analysis, the company recorded a non-cash USD6.5 billion goodwill impairment charge driven by the difference between the company’s market capitalisation and carrying value at 31 March 2019’.