Telecom and technology service provider,
Cincinnati Bell Inc.
) reaffirmed its financial projections for 2013. The company
maintains a revenue projection of $1.2 billion and adjusted
EBITDA estimate of approximately $390 million. This forecast
excludes the results of its former data center segment.
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We believe that Cincinnati Bell enjoys a comfortable market
position owing to its distinguished brand name, attractively
priced service bundles as well as proactive marketing and
expansion strategies. Cincinnati's Wireline segment remains the
prime growth driver based on its strong Fioptics business. Taking
up new projects and the spin-off of CyrusOne into a separate
entity are expected to work in favor of the company and aid it in
reaching its financial projection in 2013 and beyond.
Cincinnati Bell's strategy of offering attractively priced
service bundles, including customized blends of local and
long-distance phone service, broadband Internet access, and
strength in wireless operations will enable it to satiate the
growing demand. With a well-designed marketing program, plus
well-known brand and strong reputation for offering high-quality
service, the company is likely to increase market share. The
company operates a number of distribution channels with stores
located at affordable areas to support the functions of the
wireless and wireline segments. We also appreciate the company's
constant investments in growth opportunities along with
consolidation of product offerings, systems and back office work.
However, Cincinnati Bell continues to experience erosion in local
access lines, which can remain a deterrent to its growth goals.
With Digital Subscriber Line (DSL) and cable modems gaining
widespread acceptance, customers are deactivating extra phone
lines that were used to access the Internet via dial-up modem. In
addition, the shift toward wireless services and aggressive
rollout of VoIP and long distance services by Tier-1 competitors
Verizon Communications Inc.
) in Cincinnati and Dayton have further contributed to access
line erosion. Like other wireline carriers, Cincinnati Bell is
confronting competitive threats from local cable operators such
Time Warner Cable Inc.
), which aggressively deploys local phone service in addition to
television. This has already resulted in the loss of major
Cincinnati Bell currently holds a Zacks Rank #3 (Hold).