October 4, 2011 / 7:55 PM / 7 years ago

Level 3 says to cut hundreds of jobs in U.S.

NEW YORK (Reuters) - Level 3 Communications Inc LVLT.O expects to lay off hundreds of employees, mostly in the United States, as part of its effort to integrate its $1.9 billion Global Crossing purchase, a top executive said.

“In large parts of the world it is very minimal. Here in the U.S. there will be some job cuts.” Chief Executive James Crowe told Reuters in New York.

Level 3, which has 11,000 employees, on Monday announced the closing of its Global Crossing deal and its plans to switch to the New York Stock Exchange from the Nasdaq.

In April, Level 3 bought smaller rival Global Crossing Ltd to strengthen its fiber-optics networks business and expand into Europe and Latin America.

“We want to keep the top line growing. The cost savings will come, but we are not in a hurry to have all the cost savings in the first week,” Crowe said.

Chief Financial Officer Sunit Patel said cash benefits will start appearing on Level 3’s bottom line in 2013.

Level 3 operates fiber-optic networks in the United States, Europe and Latin America and is looking to enter the African market. In the United States, the fiber infrastructure market is dominated by AT&T (T.N) and Verizon Communications Inc (VZ.N).


The network provider said it is looking beyond streaming movies and providing video over its network to content distribution over smartphones.

“Our presence with content distribution to mobile devices is where we want to go over the next five to 10 years. Today it is still about broadband to home and enterprises, but over time mobile devices would be your primary interface,” he said.

Level 3 provides the network backbone that Netflix Inc (NFLX.O) uses to stream its video-on-demand service, a market where it competes with Akamai Technologies Inc (AKAM.O) and Limelight Networks Inc (LLNW.O).

Its content delivery business accounts for only about 2 percent of its core network services revenue, offering wide a berth for growth.

Crowe said the launch of new smartphones and tablets would help Level 3. “About 1 to 2 percent of the total Internet network traffic comes from mobile devices, but the traffic from these devices is growing well over 100 percent a year.”

The company is also eyeing growth in the enterprise segment, to help companies to put up more video content on their websites, among other things.

“We now have 1,000 sales people with the Global Crossing acquisition to sell that product not just to Netflix or Major League Baseball or HBO but to our entire market,” Crowe said.


Level 3 said it is not seeing any effect of the economic slowdown that is putting pressure on the United States and Europe.

“If we didn’t read the newspapers or watch TV, we wouldn’t know that there is a financial problem at the moment,” Crowe said.

“Other non-At&T, non-Verizon companies are saying the same thing: business is fine.”

Level 3 shares were up 4 percent at $1.47 in afternoon trade on the Nasdaq.

    Reporting by Supantha Mukherjee in New York; Editing by Steve Orlofsky

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