We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Windstream (WIN) Downgraded to Hold, Competition a Drag
Read MoreHide Full Article
On Oct 5, leading exchange carrier in the U.S., Windstream Holdings Inc. , was downgraded by a notch to a Zacks Rank #3 (Hold). The downgrade was a result of losses in the wireless industry, wholesale business and carrier transport business of the company along with intense competition.
Competition
The dynamics of the communication industry is significantly governed by technology innovation. Hence, leading national carriers continue to introduce networking technologies and next-generation products and services. Top-tier carriers such as AT&T Inc. (T - Free Report) , Verizon Communications Inc. (VZ - Free Report) and Sprint Corp. (S - Free Report) have deployed 4G LTE networks across most of their coverage markets. Availability of these new technologies may result in intensified competition for Windstream’s broadband Internet business. To remain competitive, the company needs to invest significantly in technology and network upgrades, or experience greater subscriber churn to larger competitors.
Windstream can also utilize the higher speed copper-based VDSL2 service to overcome tough competition from cable multi-service operators (MSOs) – Comcast Corp. (CMCSA - Free Report) and Charter Communications – as the two continue to expand their small, medium and large businesses.
Other Risks
Windstream has been grappling with losses in the wireless industry, wholesale business and carrier transport business. Wireless competition has resulted in reduction in the company’s access lines and has led to pricing pressure in the industry. The wholesale business is dealing with diminishing access lines, lower switched access rates and fewer minutes of usage. Windstream’s carrier transport business is also affected as telecom operators demand smaller amount of copper-based dedicated circuits for the transfer of data between different points within their network.
Windstream is also subject to stringent regulatory measures set by the telecom regulatory authority in the U.S. – Federal Communications Commission (FCC)
Despite management’s efforts to modify its financial profile, we are concerned about Windstream’s highly leveraged balance sheet. The company’s ongoing collaborations and investment plans to expand its coverage markets and subscriber count will likely increase its expenditure and strain its balance sheet, as the company is predominantly funding most of these activities through debt.
Recent Developments
Windstream is well poised for long-term growth based on its investments in fiber-to-the tower, broadband networks and cost management initiatives. Windstream’s new cloud-to-cloud disaster recovery management solutions replicate mission-critical virtual servers and data to provide an alternative system for cloud-based disaster recovery system to customers. The company strengthened its existing tie-up with Cologix through the construction of 2 new PoPs in Dallas, TX and Columbus, OH. Also, the recent expansion of its metro fibre network business in Atlanta, Minneapolis and Chicago and plans of ramping up the deployment of G.fast technologies to deliver speeds of up to 1 gigabit per second (Gbps) over traditional copper telephone wires should bode well.
Meanwhile, the company announced that its $250 million Project Excel program, launched in 2015, is on track. The project will enhance the network provision of the company by upgrading its fiber-fed DSLAM (Digital Subscriber Line Access Multiplexer) infrastructure to VDSL2-(Very-high-bit-rate digital subscriber line 2) network equipment, to deliver higher speeds of 50-100 Mbps (Mega bits per second) and a better durable backhaul network. Windstream expects to complete the project by the end of 2016.
The current year earnings estimates for NTT DOCOMO have improved 7.27%, over the last 60 days.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Windstream (WIN) Downgraded to Hold, Competition a Drag
On Oct 5, leading exchange carrier in the U.S., Windstream Holdings Inc. , was downgraded by a notch to a Zacks Rank #3 (Hold). The downgrade was a result of losses in the wireless industry, wholesale business and carrier transport business of the company along with intense competition.
Competition
The dynamics of the communication industry is significantly governed by technology innovation. Hence, leading national carriers continue to introduce networking technologies and next-generation products and services. Top-tier carriers such as AT&T Inc. (T - Free Report) , Verizon Communications Inc. (VZ - Free Report) and Sprint Corp. (S - Free Report) have deployed 4G LTE networks across most of their coverage markets. Availability of these new technologies may result in intensified competition for Windstream’s broadband Internet business. To remain competitive, the company needs to invest significantly in technology and network upgrades, or experience greater subscriber churn to larger competitors.
Windstream can also utilize the higher speed copper-based VDSL2 service to overcome tough competition from cable multi-service operators (MSOs) – Comcast Corp. (CMCSA - Free Report) and Charter Communications – as the two continue to expand their small, medium and large businesses.
Other Risks
Windstream has been grappling with losses in the wireless industry, wholesale business and carrier transport business. Wireless competition has resulted in reduction in the company’s access lines and has led to pricing pressure in the industry. The wholesale business is dealing with diminishing access lines, lower switched access rates and fewer minutes of usage. Windstream’s carrier transport business is also affected as telecom operators demand smaller amount of copper-based dedicated circuits for the transfer of data between different points within their network.
Windstream is also subject to stringent regulatory measures set by the telecom regulatory authority in the U.S. – Federal Communications Commission (FCC)
Despite management’s efforts to modify its financial profile, we are concerned about Windstream’s highly leveraged balance sheet. The company’s ongoing collaborations and investment plans to expand its coverage markets and subscriber count will likely increase its expenditure and strain its balance sheet, as the company is predominantly funding most of these activities through debt.
Recent Developments
Windstream is well poised for long-term growth based on its investments in fiber-to-the tower, broadband networks and cost management initiatives. Windstream’s new cloud-to-cloud disaster recovery management solutions replicate mission-critical virtual servers and data to provide an alternative system for cloud-based disaster recovery system to customers. The company strengthened its existing tie-up with Cologix through the construction of 2 new PoPs in Dallas, TX and Columbus, OH. Also, the recent expansion of its metro fibre network business in Atlanta, Minneapolis and Chicago and plans of ramping up the deployment of G.fast technologies to deliver speeds of up to 1 gigabit per second (Gbps) over traditional copper telephone wires should bode well.
Meanwhile, the company announced that its $250 million Project Excel program, launched in 2015, is on track. The project will enhance the network provision of the company by upgrading its fiber-fed DSLAM (Digital Subscriber Line Access Multiplexer) infrastructure to VDSL2-(Very-high-bit-rate digital subscriber line 2) network equipment, to deliver higher speeds of 50-100 Mbps (Mega bits per second) and a better durable backhaul network. Windstream expects to complete the project by the end of 2016.
WINDSTREAM HLDG Price and Consensus
WINDSTREAM HLDG Price and Consensus | WINDSTREAM HLDG Quote
Stock to Consider
A better-ranked telecommunication stock is NTT DOCOMO, Inc. , with a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.
The current year earnings estimates for NTT DOCOMO have improved 7.27%, over the last 60 days.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>