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CenturyLink Inc.'s (CTL) first-quarter profit slid 16%, while revenue dropped, as the rural telecommunications provider continues to suffer from declines in its traditional phone business.

Like many of its peers in the telecom sector, CenturyLink, which provides landline phone services to rural areas, has seen its subscribership decline amid a market increasingly saturated with cell phones. The industry has consolidated to help shield itself from that drop.

CenturyLink, which added 52,000 high-speed Internet customers during the quarter and ended the period with about 2.4 million, has embarked on a buying spree of late as it aims to broaden its business, offset access line losses and capitalize on various areas of growth.

The latest results didn't include CenturyLink's acquisition of Qwest Communications, a $10.6 billion deal that closed at the beginning of April to form the nation's third-largest landline communications company. The company also continues to integrate its $5.8 billion purchase of Embarq, the former landline business owned by Sprint Nextel Corp. (S).

Meanwhile, CenturyLink last week agreed to acquire Savvis Inc. (SVVS) for about $2.5 billion in cash and stock, as the company looks to expand its hosting and cloud capabilities for business customers. The deal pushes CenturyLink further into cloud computing, a hot area in the tech sector that enables access to computer services and data storage over the Internet.

CenturyLink anticipates about 58% of its revenue will eventually come from business customers as the company integrates Qwest and Savvis.

"CenturyLink's first quarter results reflect the expected loss of legacy revenues but also significant positive trends," CenturyLink Chief Executive Glen Post said.

Looking ahead, CenturyLink forecast second-quarter earnings of 63 cents to 67 cents a share on revenue of $4.4 billion to $4.43 billion. Analysts surveyed by Thomson Reuters had expected a profit of 72 cents a share on revenue of $4.49 billion.

For the year, CenturyLink sees earnings of $2.55 to $2.65 a share and revenue of $14.9 billion to $15.1 billion. Wall Street had expected $2.96 a share and $15.12 billion, respectively.

"The company is generally pretty conservative when they guide," said Mike McCormack, an analyst at Nomura Securities. But he expects significant upside from the Qwest transaction, which should start benefiting results later this year and into 2012.

CenturyLink shares recently edged down 0.2% at $40.30. The stock is down 13% in 2011.

McCormack said the company's buying spree is a cause for concern for investors, especially because it'll take CenturyLink a significant amount of time to integrate all the different entities it has acquired. "It creates a dampening impact on people's appetites for shares," he said.

Even as CenturyLink continues to suffer from declines in its traditional phone business, Post said the company continues to see an improvement in the rate of access line declines. On a conference call, he said the company lost 106,500 access lines in the first quarter, which represents a 15% improvement from a year ago. CenturyLink finished the quarter ended March 31 with 6.4 million total access lines.

"We continued to see a decline in disconnect orders in both the consumer and business segments, which we believe is attributable to a more stable economy resulting in fewer moves," Post said.

On Thursday, CenturyLink reported a profit of $211.1 million, or 69 cents a share, down from $252.6 million, or 84 cents a share, a year earlier. Excluding integration and severance-related costs and other impacts, adjusted per-share earnings fell to 76 cents from 93 cents. Revenue decreased 5.8% to $1.7 billion.

Analysts expected a profit of 70 cents a share on revenue of $1.7 billion.

-By Steven Russolillo, Dow Jones Newswires; 212-416-2180; steven.russolillo@dowjones.com

--John Kell contributed to this article.

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