On Jul 4, 2014, we issued an updated research report on regional
communication service provider
Cincinnati Bell Inc.
). The carrier is expected to deliver stable financial performance
in the months ahead, owing to its investment in strategic products,
high speed Internet and strong managed service demand.
However, erosion in local access lines due to fierce competition
and the winding up of its wireless operation could affect the
company's performance. Cincinnati Bell currently carries a Zacks
Rank #3 (Hold).
Cincinnati Bell expects to increase its wireline revenues based on
a well-designed marketing program, popular brand value and a strong
reputation of offering high-quality service. The company's
investments in Fioptics products, which provide entertainment,
high-speed Internet, and traditional voice via fiber line to the
home, are on an uptrend.
Cincinnati Bell continues to deploy fiber network, which is
expected to provide high quality video and internet service to its
residential customers. The company also intends to continue
investing in Fioptics network and expects to spend $75-80 million
in expansion. These investments enrich the customer experience,
thus improving ARPU and churn in return.
Cincinnati Bell, through its team of efficient and highly skilled
IT professionals, offers a wide array of services to clients at
competitive rates and is foreseeing increased demand for our
virtual data center and staff augmentation services. Demand for
Managed & Professional services remains strong and is expected
to enhance the company's results. Further, the carrier continues to
scrutinize all options to monetize its investments in CyrusOne and
enhance shareholder returns.
On the flip side, Cincinnati Bell continues to experience erosion
in high margin local access lines. Like other wireline carriers,
Cincinnati Bell is confronting competitive threats from local cable
Time Warner Cable Inc.
), who aggressively deploy local phone service in addition to
television. This has already resulted in the loss of major business
customers at the company.
The carrier is winding up its wireless operations, which remains
highly challenged by competition from large national carriers. The
company is lagging national competitors in the construction of 4G
network as well as in terms of their speeds, which leads to
increased customer churn. Apart from removing a recurring revenue
stream, the closure will also impact the company's 2014 cash
Key Picks from the Sector
Better-ranked stocks like
BT Group Plc.
) with a Zacks Rank #1 (Strong Buy) look attractive in the short
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