One of the leading integrated telecommunications service
) will accept $54 million from the Federal Communications
Commission's (FCC) Connect America Fund (CAF) this year. This
will fund broadband services in suburban households of high-cost
This $54 million is the second tranche of funds that the
company is being granted under FCC's CAF 1 phase. CenturyLink
will also inject in an equal amount of its own capital to support
the FCC cause. Notably, three months back, CenturyLink was
announced eligible to receive a minimum of $90 million from FCC's
Connect America Fund this year.
A combined value of more than $108 million will be invested by
CenturyLink in the next three years to deploy high-speed Internet
to nearly 92,000 rural customers. The company aims to attain a
download speed of 4Mbps and an upload speed of 1Mbps in 33 of the
37 states where it offers residential Internet services.
Financial grants from CAF represent an important source of
CenturyLink's network access revenues. The company has already
received $35 million in CAF phase I, which was utilized to deploy
broadband service to 45,000 households in underserved areas.
Through CAF phase 1, CenturyLink will deploy high-speed Internet
to nearly 140, 000 rural homes.
Although CenturyLink has been receiving CAF grants, large
incumbent operators like
Verizon Communications Inc.
) have thus far restrained itself from accepting FCC's aid. The
carriers have rejected the help based on strict limitation on the
utilization of funds and adherence to strict reporting
requirements. However, AT&T has agreed to accept CAF funds
after FCC relaxed some of the prior norms.
The company is investing in fiber-to-the-tower (FTTT)
expansion, with 1,000fiber builds already completed in the second
quarter. The company remains on track to build 4,000 to 5,000
fiber towers in 2013. We believe that the CAF funds will help in
the company's FTTT expansion, which will enable the company to
offer competitive broadband products and services. This in turn
could allow the company to reduce Internet customer churn.
CenturyLink, which operates with other market players like
Leap Wireless International Inc.
), currently carries a Zacks Rank #3 (Hold).
CENTURYLINK INC (CTL): Free Stock Analysis
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