), which is one of the largest U.S. rural local exchange carriers
(RLEC), has plans to extend its Carrier Switched Ethernet service
across more than 300 CLEC footprints.
Earlier, Carrier Switched Ethernet service was available in
Windstream's ILEC footprint, so deployment of the Ethernet
technology will allow other telecom operators to use it via
regional Network-to-Network Interfaces (NNIs).
Carrier Switched Ethernet service will not only improve the
quality of network speed but will also reduce cost as the service
will be available through copper wire or fiber optic cable.
Moreover, it will also be beneficial to the end users as they will
get network speed of 3 Mbps to 1 Gbps.
We believe Windstream remains poised to gain from high-speed
Internet services that are benefiting from increased market
traction. Additionally, the company's acquisition of PAETEC will
also be aided by expanding service offerings, increasing wireless
data backhaul services and offering managed services and cloud
Further, Windstream's deleveraging initiatives and refinancing
activities are expected to generate healthy cash flows, attracting
investors through a high dividend payout in the due course.
However, we remain on the sidelines due to competitive pressure
from peers like
), a highly leveraged balance sheet as well as continued
access-line erosion, which could partially be offset by broadband
We are currently maintaining our long-term Neutral
recommendation on Windstream. Currently, it has a Zacks #3 Rank
implying a short-term Hold rating on the stock.
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