On Jul 1, we maintained our Neutral recommendation on
). The company is characterized by a reformed business structure,
broadband expansion, faster fiber builds, better cloud computing
services and penetration into new markets. However, the company
faces several risk factors that may impede its operating
performance going forward. The leading landline operator holds a
Zacks Rank #3 (Hold).
CENTURYLINK INC (CTL): Free Stock Analysis
NIPPON TELE-ADR (NTT): Free Stock Analysis
TELUS CORP (TU): Free Stock Analysis Report
VERIZON COMM (VZ): Free Stock Analysis Report
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CenturyLink has redesigned its operating segments to strengthen
its grip on the market as well as remain fully committed to
wholesale, hosting and consumer customers. The company is also
expected to witness a slower rate of revenue decline owing to
long-standing ties with clients by bundling integrated services,
launch of new and attractive services, consistent technology
upgrades, infrastructure enhancement, better usage of networks
and profitable collaborations with major players such as
Verzion Communications Inc.
We appreciate CenturyLink's commitment to take Prism TV service
to additional markets and its investment in fiber-to-the-tower
(FTTT) expansion. The company is also concentrating on developing
the business base of its subsidiary Savvis, which has contributed
immensely in uplifting the performance level of the former
through its cloud computing and managed hosting solutions for
Moreover, CenturyLink continues to expand data centers this year
with a view to generate higher revenue in collocation as well as
managed hosting and cloud services. The company is on track to
enlarge its global foothold with the expansion of 10 data centers
within 2013. We also applaud BCE's efforts to generate higher
shareholder returns through share repurchase.
However, certain headwinds such as deteriorating legacy voice and
access revenues due to the loss of customers, federal
regulations, labor issues and rapid changes in technology keep us
The second and third quarters of 2013 have the Zacks Consensus
Estimate for earnings pegged at 67 cents and 66 cents per share,
respectively. This reflects year-over-year growth of 3.3% for the
next quarter and 0.6% for the third.
Companies operating within the telecommunication sector that are
worth taking note of include
Nippon Telegraph and Telephone Corporation
). While the former holds a Zacks Rank #1 (Strong Buy), the
latter carries a Zacks Rank #2 (Buy).