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Windstream Holdings Inc. (WIN - Analyst Report) reported weak third-quarter 2013 results due to voice and digital television subscriber loss and reduced intrastate access rates. These were partially offset by strong data and integrated service revenues.

Quarterly adjusted earnings per share of 8 cents fell short of the Zacks Consensus Estimate of 9 cents. Comparing with the prior-year quarter, earnings remained the same.

Pro forma revenues decreased 2.7% year over year to $1,503.6 million in the third quarter and was below the Zacks Consensus Estimate of $1,507.0 million. Total Service revenues and Product sales fell 2.6% and 6.4% year over year, respectively.

Adjusted OIBDA (excluding non-cash pension expense, non-cash stock-based compensation and restructuring charges) was $574.7 million in the third quarter compared with $592.0 million in the year-ago quarter.

Subscriber Statistics

During the third quarter, total access lines, which include voice lines, high-speed Internet and digital television customers, decreased 4.8% year over year to $3.35 million. Voice lines and digital television customers witnessed a year-over-year decline of 6.0% and 5.0%, respectively, while high-speed Internet fell a 3.0%.


Windstream exited the third quarter with cash and cash equivalents of $73.4 million compared with $132.0 million at the end of 2012. Long-term debt and capital lease obligations were $8,760.8 million compared with $8,099.8 million at the end of 2012.

For the third quarter, the company generated adjusted free cash flow of $264.0 million and capital expenditure was $187.4 million.

Our Analysis

We believe that a competitive market scenario, continuous access line loss, regulatory issues and constant upgrades in the technological scenario will impede the company’s growth.

Other Stocks

Other telecom companies like Frontier Communications (FTR - Analyst Report) and Century Link Inc. (CTL - Analyst Report) reported third-quarter results on Nov 5 and Nov 6, respectively. Frontier and CenturyLink reported in-line earnings of 6 and 63 cents respectively.

Windstream currently carries a Zacks Rank #4 (Sell). However, a stock worth considering within the same sector is Leap Wireless , which currently carries a Zacks Rank #2 (Buy).

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