CenturyLink 2013 Annual Report Download - page 7

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“ We strive to listen to our customers to
identify and develop innovations with
the greatest potential to enable growth
for businesses and enhance quality of
life for consumers.”
We plan to expand fiber-to-the-tower builds to help drive long-
term growth. We built fiber to 4,100 cell towers in 2013 and ended
the year with more than 18,800 fiber-connected towers. In 2014, we
plan to add another 3,000 to 3,500 towers. By the end of 2014, we
will have deployed fiber to roughly 72 percent of the cell towers in our
local-exchange service area, which will better position us to secure
long-term data transport revenues from wireless carriers. We also
design and engineer fiber-to-the-tower builds to maximize the number
of potential new business customers passed by our fiber network,
creating additional revenue growth opportunities.
We expect to continue to invest in managed hosting and cloud
services. We acquired AppFog, Inc. and Tier 3, Inc. in 2013 to enhance
our platform-as-a-service (PaaS) and infrastructure-as-a-service (IaaS)
offerings. AppFog provides a reliable, scalable and fast platform for
developing apps in the cloud, and Tier 3 provides a public, multi-tenant
cloud platform and a related development roadmap that now form the
foundation of our cloud development strategy. With the Tier 3 acquisi-
tion, we also opened our Cloud Development Center in Seattle, which
is home to a large base of cloud-computing talent.
In 2013, we expanded our partnership with VMware to provide
businesses with a choice of services, and we continued to develop
solutions relevant to IT decision-makers in areas such as automation,
flexibility, agility, security and Big Data. We expanded our global data
center footprint, adding new centers in London and Hong Kong and
announcing new locations in Toronto and Minneapolis for 2014. In
early 2014, we changed the name of our managed hosting and cloud
services business from Savvis to CenturyLink Technology Solutions.
We believe the CenturyLink Technology Solutions name better
presents the combined value we deliver to businesses through our
colocation, managed services, cloud and network offerings.
Delivering Shareholder Value
We strive to operate our business with financial discipline and trans-
parency. In early 2013, we announced a new capital allocation strategy
that reduced our quarterly dividend and authorized the repurchase of
up to an aggregate $2 billion of outstanding stock over the two-year
period ending Feb. 13, 2015. We believe this strategy enhanced our
long-term ability to balance our multiple objectives of growing our
business, honoring our debt and other financial obligations, and return-
ing cash to shareholders, while reducing the number of outstanding
shares and increasing the resulting free cash flow per share.
In 2013, we returned $2.89 billion to our shareholders in stock buy-
backs and dividend payments, which is greater than the amount we
would have returned in 2013 under our previous dividend payout. We
repurchased $1.59 billion in common stock during 2013, which repre-
sented approximately 79 percent of our February 2013 $2 billion stock
repurchase program, and expect to complete the program in second
quarter 2014. In February 2014, our Board of Directors approved a
second 24-month stock repurchase program, authorizing the buyback
of up to an additional $1 billion in common stock, which becomes
effective upon the completion of the current $2 billion program.
By the end of 2013, we achieved monthly annualized run-rate operating
expense synergies of approximately $600 million from the integration
of Qwest into CenturyLink, successfully completing an effort that
began when the deal closed in April 2011. Effectively managing costs
and achieving operating efficiencies are among CenturyLink’s proven
strengths and are vital to our ability to serve customers in dynamic,
competitive markets.
In other financial matters, we executed debt financings in 2013 at
favorable rates to extend maturities, and maintain flexibility and
access to liquidity. We also reached a definitive agreement resolving
the litigation filed by the trustees in the KPNQwest bankruptcy pro-
ceeding in the Netherlands, which had been ongoing since 2010.
The settlement amount of approximately €171 million is significantly
below the €4.2 billion litigation claim.
We begin 2014 with strong momentum. Our Managed Office solu-
tion and enhanced cloud hosting capabilities are resonating well with
our business customers. Our 1 Gbps service and applications like
Prism™ TV and Connected Home are reinforcing our reputation for
innovation with consumers. We are confident in our strategies and our
platform for growth, and we are clearly focused on helping our cus-
tomers thrive in a broadband-enabled, data-driven, cloud-based world.
We thank you, our shareholders, for your continued trust in Century-
Link, its management team and employees. We do not take this trust
for granted. We work every day to earn your confidence and drive
long-term value for your investment.
Glen F. Post, III
Chief Executive Officer and President