On May 31, we maintained our Neutral recommendation on
), owing to the strength in both wireless and wireline business
units, and a solid financial position. However, the company faces
certain headwinds that will likely slow down its growth momentum.
The regional communication service provider holds a Zacks Rank #3
CINCINNATI BELL (CBB): Free Stock Analysis
SHENANDOAH TELE (SHEN): Free Stock Analysis
TELUS CORP (TU): Free Stock Analysis Report
TELEF BRASIL SA (VIV): Free Stock Analysis
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Cincinnati Bell is characterized by a well-known brand, strong
reputation for offering high-quality services including
customized blends of local and long-distance phone service,
broadband Internet access as well as its well-designed marketing
program. The company's distribution channels with stores located
at affordable areas lend high support to the functions of the
wireless and wireline segments.
Cincinnati Bell displays immense prospects in the wireline
operations, especially Fioptics products. During the first
quarter, the company introduced Fioptics products to about 15,000
homes and businesses, reaching a total of 220,000 units. In 2013,
the company targets to deploy Fioptics to 72,000 additional
premises, with an investment of nearly $70 million to $75
million. We also appreciate the company's focus on upgrading its
network with the help of software improvements and installation
of additional fiber optic cables.
The company is also concentrating on developing its IT Services
and Hardware division with the aim to reap in more businesses
from the segment. A team of efficient and highly skilled IT
professionals offers a wide-array of services to clients at
However, we stay on the sidelines considering the erosion in
local access lines, fierce competition and rising maintenance
expenses that pose major roadblocks in the company's growth path.
The company's outlook also remains clouded by market saturation,
legal issues and the lingering effects of the spin-off of Data
Center Colocation into a separate entity.
The second and third quarters of 2013 have the Zacks Consensus
Estimate for earnings pegged at 2 cents and one cent per share,
respectively. This reflects a year-over-year decline of 68.6% in
the next quarter and growth of 40.0% in the third quarter.
Companies operating within the telecom sector that are worth
taking notice of are
Shenandoah Telecommunications Co.
Telefonica Brasil, S.A.
). While the former holds a Zacks Rank #1 (Strong Buy), the
latter two stocks carry Zacks Rank #2 (Buy).