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Fresh from its merger with Level 3, CenturyLink is now looking to expand its footprint in Asia-Pacific, a fast-growing region with an insatiable appetite for digital services that has been fuelling the demand for connectivity and cloud services among enterprises and consumers alike.
Matt Gutierrez, CenturyLink’s newly-minted senior managing director for Asia-Pacific, believes the US telecoms bigwig now has what it takes to stake a claim on the market with a full suite of connectivity, security and IT services, even as it is up against formidable rivals like Japan’s NTT.
In an interview with Computer Weekly, Gutierrez talks up the implications of the Level 3 deal, his priorities for the region, as well as CenturyLink’s product strategy post-merger.
What does the Level 3 merger mean for customers in the Asia-Pacific region?
Gutierrez: CenturyLink is the second-largest fixed line telecommunications company in the US with close to $24bn in turnover, but we’re not a household name outside the US. The Level 3 merger gives CenturyLink a more global presence, including Latin America, Emea (Europe, Middle East and Africa) and Asia-Pacific.
Both companies have a good level of investment in the Asia-Pacific region, but as extensions of their North America teams. With the merger, Asia-Pacific, the largest and fastest growing region in the world, will be a market we will focus more on.
The two companies are also very complementary – CenturyLink has a strong managed hosting, security and SAP practice in the region, while Level 3 has a strong network play, serving customers in North America and Emea. The merger expands the number of countries in Asia where we have licences to operate, dramatically increasing our scale, solutions and employee base.
Read more about IT and telecoms in APAC
- Thales will open what it calls a “digital factory” in APAC, with India and Australia potential candidates for the new coding centre.
- Singtel and VMware are setting up a sandbox environment for enterprises to test their workloads in a hybrid cloud environment.
- Colt is laying the groundwork to build datacentres in India and Singapore, and is working on new datacentre technologies to improve energy efficiency.
- A new subsea cable to be built by a regional consortium will provide faster and more reliable connectivity between Australia and fast-growing markets in Southeast Asia.
The bigger opportunity is that we’re able to serve our existing 6,000-strong customer base in North America and Europe that have operations in Asia-Pacific, but are not our customers in the region.
Now, we have the opportunity to serve them globally and provide a single customer interface. At the same time, the big Asian carriers and over-the-top (OTT) service providers are expanding globally. We hope to capture that growth on our network as well.
Are you looking to flip things around and target companies solely in Asia? And what would be your key priorities in the region?
Gutierrez: We will certainly target companies based solely in Asia, but the reality and economics is that we’re competing against the likes of NTT that have network depth in the region.
Our value proposition is to serve customers with a global footprint – if you’re a multinational company with 50 sites around the world, including 10 in Asia, we can provide one look and feel globally. These customers generally value the fact that we have people co-located with them in places where they make decisions.
Our priorities for the region would be to better fulfil the needs of our existing customers within Asia, and to bring our offerings on par – from a scale perspective – with our competitors in the region like BT, Orange, Verizon, NTT and Singtel. There will be a big focus on capital investment to cover the region geographically.
Matt Gutierrez, CenturyLink
CenturyLink has also offloaded its datacentre assets. What’s the thinking behind that?
Gutierrez: We’re spending a fair amount of capital, which we want to use to support the growth and customer experience of large multinational companies. When you’re in the datacentre business, you’re spending a significant amount of money to maintain datacentres and get them upgraded at each location.
So, we made the decision to sell that business to Cyxtera Technologies and focus on capital investment on networks and tools for customers.
From a customer standpoint, it shouldn’t be too different – we’ve become the biggest customer of Cyxtera, and we have a stake in Cyxtera as well. We also have a corporate-wide, buy-sell relationship with them, so we can also supply their co-location services as part of our offerings.
What does the merger mean for CenturyLink’s cloud business? I understand that CenturyLink is one of the top 10 cloud suppliers, but it’s still far from being the top three or four.
Gutierrez: Customers are trying to get more efficient and improve their cost structure with the cloud, but our aim is not to be the biggest cloud provider in the world. We’re not going to compete with the Amazons and Azures, but we want to be able to provide customers with the flexibility to migrate to different cloud services, or maybe not migrate at all if they don’t see the need to.
We have a set of products around cloud application management, and some of our acquisitions will help us to provide that service. Our customers can maintain things in their own datacentre, move them to Amazon or Azure, or use the CenturyLink public cloud.
Can you talk about integration process between the CenturyLink and Level 3? Are there still kinks to be ironed out?
Gutierrez: It takes years to fully integrate. We’ve done a good job in this region to put together a management team that represents both CenturyLink and Level 3. Globally, the organisation is put together and firmly in place.
Integrating systems and products, however, takes time. For example, both companies have network products in the region, and that’s going to take a couple of years to integrate. You don’t want to move too fast, because customers are using the products for various reasons. We need to make sure we’re not interrupting what customers are doing.
We’ve been determining what the products will be for different markets and customers, and we’re still rationalising them in some cases. An example is security where we have three different suites of services from CenturyLink and Level 3.
That takes two to three years to integrate, because while we may have a product set that we sell to new customers, we still have customers that we need to support on older systems. For provisioning and trouble ticketing systems, we’ve put in place a roadmap on what the end-state will be, but it’ll take a while to migrate and deploy those systems globally, and to cross-train everyone.
Return on investment
Is there any return on investment (ROI) horizon for the region? The likes of NTT are in Asia for the long term – they are willing to take some losses for years, especially in price-sensitive markets like Indonesia. But that’s not usually the case for US-based players I’ve spoken to.
Gutierrez: That’s something (tolerance for losses) we’re still developing as a region. I can’t give you an exact ROI target, but we’re certainly here for the long term. We’ll invest, and we know we’re not going to get payback for a number of years.
Our view is that when you look at our customers globally and what they buy, if we can serve their needs in all markets, there will be a multiplier effect on how much business we can get. When we look at Asia, it’s not necessarily about getting returns from one city – it’s about the global expansion of our portfolio and network.