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Windstream to Increase Headcount

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Windstream Corporation (WIN - Analyst Report) has announced hiring plans for its Matthews call center. The company will hire approximately 100 employees to the customer service team for serving residential customers apart from working for the call center’s internal sales and small business sales group.

The company will conduct a job fair on August 22, to recruit suitable candidates. It will offer an average base salary range of $30,000 to $35,000 along with commission and other perks.

We believe that the new hirings by the company stems from its increased business volume. We believe that after the acquisition of PAETEC Holding Corp., Windstream has witnessed considerable growth in its broadband business, leading to increased need of backend customer support. 

Despite the declines in the wholesale enterprise business, the company remains focused on its efforts to expand service offerings to businesses with VoIP services, data bundles, cloud and managed services, data center services, and fiber transport, and growth distribution channels.

With demand growth and contract wins, the company continues to invest in long-term growth initiatives such as fiber-to-the-tower deployment, data center expansion and broadband network capability to support incremental revenue and gain an advantage over its peers like Frontier Communications (FTR - Analyst Report).

All these developments have ultimately resulted in more manpower requirements.  Consequently, we expect the company to add more employees in the near term.

However, we remain concerned that this increased hiring may further stress its existing highly leveraged balance sheet. The company’s ongoing acquisitions to expand its coverage markets and subscriber count are vital to its survival in an industry which is undergoing consolidation.

The acquisitions have strained the balance sheet, as the company is predominantly funding most of them through debt. However, Windstream expects to bring down its leverage ratio to historical levels of 3.2–3.4 times from the current 3.7 times through EBITDA growth and debt reduction.

We are currently maintaining our long-term Neutral recommendation on Windstream supported by a Zacks #3 Rank (Hold).

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