We believe that Cincinnati Bell is poised to deliver stable
financial performance in the months ahead, owing to its investment
in strategic products, high speed Internet and strong managed
service demand. The company's Wireline segment stands as the prime
growth driver with strength in the Fioptics business from
continuous fiber deployment. Further, the acquisition of CyrusOne
will support high demand for data center colocation service.
However, erosion in local access lines due to fierce competition
poses a major roadblock in the company's growth path. Cincinnati
Bell is also winding down its wireless operation amid constant
subscriber loss to national carriers, thus removing a recurring
revenue stream. Hence, we expect the stock to perform on par with
the broader market and retain our Neutral recommendation on it.
Based in Cincinnati, OH, Cincinnati Bell Inc. is a full-service
regional provider of data and voice communications services over
wireline and wireless networks, a full-service provider of data
center colocation and related managed services, and a reseller of
information technology (IT) and telephony equipment. The company
provides telecommunications service to businesses and consumers in
the Greater Cincinnati and Dayton areas primarily on its owned
wireline and wireless networks. Cincinnati Bell also provides
business customers with outsourced data center colocation
operations and related managed services in world class,
state-of-the-art data center facilities, primarily located in
Cincinnati, Houston, Dallas and Austin.
The company has three operating segments: Wireline, Wireless,
and IT Services and Hardware.
Wireline (accounted for 57.7% of 2013 revenues): This segment
provides local voice, data, long-distance, Voice-over-Internet
Protocol (VoIP) and other related services to customers primarily
in Ohio, northern Kentucky, and southeastern Indiana. Wireline
voice and data services are offered through the company's ILEC
subsidiary Cincinnati Bell Telephone Company LLC. The company also
offers expanded voice and data services through its other
subsidiary Cincinnati Bell Extended Territories LLC in Dayton and
Wireless (16%): The segment offers advanced digital voice and
data communications services through the operation of a Global
System for Mobile Communications/General Packet Radio Service (GSM)
network with a 3G Universal Mobile Telecommunications System (3G)
network overlay. Cincinnati Bell provides services in the company's
licensed service territory, which includes Greater Cincinnati and
Dayton, Ohio, and areas of northern Kentucky and southeastern
IT Services and Hardware (26.1%): This segment provides a full
range of managed IT solutions, including managed infrastructure
services, IT and telephony equipment sales, and professional IT
staffing services. These services and products are provided in
several states through the company's subsidiaries, Cincinnati Bell
Technology Solutions Inc. (CBTS), CBTS Canada Inc. and CBTS
In Jan 2013, Cincinnati Bell separated its Data Center
Colocation segment through an initial public offering of CyrusOne
Data Center Colocation (0.2%): From Jan 2013, CyrusOne Inc.
Cincinnati Bell's former data center business started operating as
a separate entity under the symbol CONE. An operating partnership
CyrusOne LP will manage the data center business. Although
Cincinnati Bell owns approximately 69% of the interests of CyrusOne
via its ownership of common shares and partnership units of
CyrusOne L.P, the former exhibits no control over the operations of
the newly formed company.
Cincinnati Bell Inc. (CBB): Read the Full Research
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