On Mar 11, 2014, we issued an updated research report on one
of the largest rural local exchange carriers
Windstream Holdings Inc.
). The company is expected to benefit from its investments in
fiber-to-the tower and broadband networks along with proper cost
management. The Little Rock, AR-based company currently carries a
Zacks Rank #3 (Hold).
INTELIQUENT INC (IQNT): Free Stock Analysis
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MERU NETWORKS (MERU): Free Stock Analysis
WINDSTREAM HLDG (WIN): Free Stock Analysis
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We believe fiber-to-the tower represents a long-term opportunity
for the company and with the rise in demand and contract wins,
Windstream is ramping up its FTTT construction. Windstream
completed the construction of approximately 4,500 towers and
expects to finish the year with 5,200 towers.
With respect to broadband expansion, Windstream focuses on
enhancing coverage and services in the rural market. The company
currently offers broadband speeds of 10 Meg to 12 Meg in 52%
addressable lines and 24 Meg service to 17% of its addressable
lines. These initiatives are expected to drive revenues for the
Windstream has adopted a number of measures to broaden its
business horizon. The company has been adding a number of data
centers, employing efficient sales people to boost the sales
figure and render greater customer satisfaction, and investing in
business channel. Windstream opened three data centers in 2013
and recently opened another one in Charlotte, NC.
Windstream's major risks also include access lines losses, lower
switched access rates and fewer minutes of use that are affecting
its revenues from the wireline business unit. A highly leveraged
balance sheet is another concern for the company.
Based on low demand and a subdued sales environment within the
enterprise business, the company remains skeptical about revenue
growth in 2014. It expects total revenue in 2014 to range from
down 2.5% to up 1% from 2013.
Key Pick from the Sector
While remain sidelined on Windstream, Zacks Ranked #2 (Buy)
Meru Networks Inc.
Level 3 Communications Inc.
) look attractive for the short term.