CenturyLink Restructuring Biz

CenturyLink (CTL - Analyst Report), one the leading telecom companies in the U.S.,has a new organizational restructuring plan. The company is combining its new network services business sales and operations units into a one single unit.

The network sales and business units were part of Enterprise Markets Group’s Network Services and Regional Markets Group division. The organizational restructuring will enable the company to streamline operations and help investors to gain more clarity on the operational activities within the business.

Apart from restructuring its business units, CenturyLink has successfully undertaken industry consolidation and its Qwest and Savvis acquisitions remain profitable. Both companies have so far been successfully integrated as apparent from the better-than-expected synergies from these takeovers by CenturyLink.

The Savvis acquisition marks CenturyLink’s entry into the cloud computing business. It strengthens CenturyLink’s footprint in the hosting managed cloud services business to 50 data centers in North America, Europe and Asia. The company continues to expand data centers this year with a view to generating revenue growth in collocation as well as managed hosting and cloud services.

These acquisitions bequeathed several additional benefits along with greater scale and operational efficiencies, providing the company with a competitive edge over peers like Leap Wireless International Inc. (LEAP - Analyst Report).

Currently, CenturyLink remains focused on its four primary strategic plans, which will serve as major catalysts for revenue growth. These drivers include broadband expansion and enhancement, fiber-to-the-tower (FTTT) initiatives, managed hosting and cloud services, and its IPTV offering known as Prism TV.

We have a Zacks #2 Rank, implying a short-term (1-3 months) Buy rating on CenturyLink. For the long term, we have a Neutral recommendation on the stock.