One of the leading integrated telecommunications service
) has won a project order worth $20 million from the U.S. General
Services Administration (GSA). The contract entails CenturyLink to
provide Voice over Internet Protocol (VoIP) services to GSA over
the next five years. The VoIP solution will include hosted and
premises-based services covering GSA Region 8 offices in Colorado,
Montana, North Dakota, South Dakota, Wyoming and Utah.
VoIP communication services are among the fastest growing
markets globally, gaining momentum though increased utilization in
mobile VoIP communication. The new contract proves CenturyLink's
strength over advanced network build-out that enables the company
to offer competitive technology solutions and services like VoIP.
This is not CenturyLink's first association with GSA. The company
previously provided Centrex and business voice solutions to
Further, the acquisition of Embarq, Qwest and Savvis also
strengthened the company's position in private line (including
special access), broadband, MPLS (data networking technology),
hosting, video and VoIP services. The company created a new
offering for higher-speed Ethernet, bundled with VoIP and IT
services designed exclusively for SMEs. We believe such innovations
would attract more customers and lead to market share gains for
To leverage the opportunities in the voice and data services,
the company continues to expand its network services such as
fiber-to-the-node (FTTN) access to additional 7.1 million homes by
the end of the year. Currently, the company has covered 6.3 million
units under its FTTN infrastructure.
However, the company remains challenged by the ongoing
fixed-to-wireless substitution coupled with the growing presence of
alternative services such as VoIP service by cable operators in
overlapping markets. Further, significant integration challenges as
well as increased operating expenses resulting from the
acquisitions may impede operating performance going forward. In
addition, the company faces competition from peers like
Leap Wireless International Inc.
We have a long-term Neutral recommendation on the stock. For the
short term (1-3 months), CenturyLink retains a Zacks #3 Rank
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