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Windstream Monetizes Assets to Focus on Core Operations
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Windstream Holdings, Inc. recently announced that it has monetized some assets in order to reduce its capital expenditure and focus on core operations. These include the non-core asset sale of certain fiber assets worth $60.5 million to Arvig Enterprises, Inc. — a Minnesota-based provider of telecommunications and broadband services.
The transactions included fiber assets in Minnesota and Nebraska, totaling $49.5 million and $11 million, respectively. As part of the deal with Arvig, Windstream will continue to utilize the assets to sell its products and services across both the locations.
The strategic divestment was part of the long-term policy of the company to focus on its core network offerings. At the same time, Windstream is seeking diversification from legacy telecom services to more business, enterprise and wholesale opportunities. To meet this end, Windstream has made a significant financial investment to upgrade its network and product portfolio, including significant advances in software-defined wide area network (SD-WAN) capabilities and a new Cloud Core architecture.
In addition, Windstream is realigning its wireless network toward a software-centric model to meet increasing business demands and customer needs. The company is transforming its product portfolio and network in an attempt to enhance customer experience. The service provider claimed that customers from different sectors like regional banking, healthcare, retail and manufacturing purchased its SD-WAN service. The launch of a multi-featured SD-WAN solution and its cloud-to-cloud disaster recovery management solutions should rake in considerable profits.
The company’s focus on improving sales, cutting costs and pricing initiatives are commendable. Investments made in data center and fiber expansion will likely offer further impetus for revenue growth in the coming quarters. Expansion of its metro fiber network business in newer areas and its aim to extend the deployment of G.fast technologies over traditional copper telephone wires bode well. Windstream is also focusing on optimizing its last mile network and in turn cut costs.
However, over the past year, the stock has recorded an average loss of 74.2% compared with 8.4% decline for the industry. Wireless competition has resulted in a reduction in the company’s access lines, and has led to pricing pressure in the industry. As wireless carriers continue to expand and improve their network coverage while lowering their prices, some customers have chosen to stop using traditional wireline phone service and instead rely solely on wireless service. This trend is expected to continue, negatively affecting the number of served access lines at Windstream.
Moreover, Windstream remains under pressure from losses in the wholesale business. These, in particular, include diminishing access lines, lower switched access rates and fewer minutes of usage. The company expects wholesale revenues to improve, albeit at a slower pace. Additionally, Windstream’s carrier transport business faces pressure as the telecom operators demand smaller amounts of copper-based dedicated circuits to transfer data traffic between different points within their network.
The asset sale transactions are perhaps a strategy to stem the losses and improve its liquidity to improve its sagging share price performance. It remains to be seen what 2019 has in store for this Zacks Rank #3 (Hold) stock.
United States Cellular surpassed estimates in each of the trailing four quarters, the average positive earnings surprise being 108.1%.
Sprint has long-term earnings growth expectation of 19.6%. It has surpassed estimates in each of the trailing four quarters, the average positive earnings surprise being 320.8%.
Telenav has surpassed estimates in each of the trailing four quarters, the average positive earnings surprise being 12%.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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Windstream Monetizes Assets to Focus on Core Operations
Windstream Holdings, Inc. recently announced that it has monetized some assets in order to reduce its capital expenditure and focus on core operations. These include the non-core asset sale of certain fiber assets worth $60.5 million to Arvig Enterprises, Inc. — a Minnesota-based provider of telecommunications and broadband services.
The transactions included fiber assets in Minnesota and Nebraska, totaling $49.5 million and $11 million, respectively. As part of the deal with Arvig, Windstream will continue to utilize the assets to sell its products and services across both the locations.
The strategic divestment was part of the long-term policy of the company to focus on its core network offerings. At the same time, Windstream is seeking diversification from legacy telecom services to more business, enterprise and wholesale opportunities. To meet this end, Windstream has made a significant financial investment to upgrade its network and product portfolio, including significant advances in software-defined wide area network (SD-WAN) capabilities and a new Cloud Core architecture.
In addition, Windstream is realigning its wireless network toward a software-centric model to meet increasing business demands and customer needs. The company is transforming its product portfolio and network in an attempt to enhance customer experience. The service provider claimed that customers from different sectors like regional banking, healthcare, retail and manufacturing purchased its SD-WAN service. The launch of a multi-featured SD-WAN solution and its cloud-to-cloud disaster recovery management solutions should rake in considerable profits.
The company’s focus on improving sales, cutting costs and pricing initiatives are commendable. Investments made in data center and fiber expansion will likely offer further impetus for revenue growth in the coming quarters. Expansion of its metro fiber network business in newer areas and its aim to extend the deployment of G.fast technologies over traditional copper telephone wires bode well. Windstream is also focusing on optimizing its last mile network and in turn cut costs.
However, over the past year, the stock has recorded an average loss of 74.2% compared with 8.4% decline for the industry. Wireless competition has resulted in a reduction in the company’s access lines, and has led to pricing pressure in the industry. As wireless carriers continue to expand and improve their network coverage while lowering their prices, some customers have chosen to stop using traditional wireline phone service and instead rely solely on wireless service. This trend is expected to continue, negatively affecting the number of served access lines at Windstream.
Moreover, Windstream remains under pressure from losses in the wholesale business. These, in particular, include diminishing access lines, lower switched access rates and fewer minutes of usage. The company expects wholesale revenues to improve, albeit at a slower pace. Additionally, Windstream’s carrier transport business faces pressure as the telecom operators demand smaller amounts of copper-based dedicated circuits to transfer data traffic between different points within their network.
The asset sale transactions are perhaps a strategy to stem the losses and improve its liquidity to improve its sagging share price performance. It remains to be seen what 2019 has in store for this Zacks Rank #3 (Hold) stock.
Some better-ranked stocks in the same space are United States Cellular Corporation (USM - Free Report) , Sprint Corporation (S - Free Report) and Telenav, Inc. , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
United States Cellular surpassed estimates in each of the trailing four quarters, the average positive earnings surprise being 108.1%.
Sprint has long-term earnings growth expectation of 19.6%. It has surpassed estimates in each of the trailing four quarters, the average positive earnings surprise being 320.8%.
Telenav has surpassed estimates in each of the trailing four quarters, the average positive earnings surprise being 12%.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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