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Cincinnati Bell Invests in Call Centers, Fiber to the Home

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On Mar 20, we issued an updated research report on Telecom service provider Cincinnati Bell Inc. (CBB - Free Report) .

What’s Driving Cincinnati Bell?

Cincinnati Bell’s efforts to transform itself from a legacy copper-based telecommunications company to an IT company with contemporary fiber assets, offering flexible data, video, voice and IP solutions to both consumer and business customers, are impressive.

In the Entertainment and Communications business, the company’s investments in Fioptics products have helped it to witness revenue growth and subscriber addition. In this regard, the introduction of MyTV through its Fioptics high-speed Internet service bodes well. Additionally, increased investments in strategic products, the creation of a new business division for small and mid-sized businesses as well as the development of its IT Services and Hardware division have raked in more profits.

We also appreciate Cincinnati Bell’s recent decision to start offering eero inc’s whole-home Wi-Fi system at eight of its retail stores across Greater Cincinnati. This in turn has helped in expanding its FTTH (Fiber to the home) customer base. Also, the company’s decision to expand its call centre base by hiring 300 more employees at its universal call centers has added to the region’s economic development. In fact, the call center agent growth comes at a time when Cincinnati Bell is expanding its local fiber network to support its Fioptics Entertainment, Internet and Voice services. Notably, Cincinnati Bell’s Fioptics services are considerably doing well.

In Nov 2016, Cincinnati Bell declared a deal with The E.W. Scripps Company, an American broadcasting company in Cincinnati. Per the deal, Scripps’ wholly owned subsidiary – Newsy, a digital video news channel – will now be offered through its Fioptics cable television services. Newsy is accessible on devices such as Apple Inc.’s (AAPL - Free Report) Apple TV, DISH Network Corp.’s Sling TV, Roku, Amazon.com Inc.’s Fire TV and Google Chromecast. It is also available on mobile apps like iOS, Android and Kindle Fire.

Troubles

Over the past three months, shares of Cincinnati bell contracted 12.59% while the Zacks categorized Diversified Communication Services industry gained 6.15%.

Cincinnati Bell continues to experience erosion in local access lines, heavy capital expenditure requirements, legal hurdles and a weakening cash and liquidity position. The decline in cash flow may dent its credit ratings.  Moreover, intensifying competition in the company’s operational region can prove to be a drag on its pricing power, thereby inducing pressure on margins.

In addition, the company faced opposition to its Local Area Service (LAS) discontinuation within the Kentucky region, from consumers and industry groups, citing concerns over the eventual shutdown of POTS services. Also, CenturyLink Inc. (CTL - Free Report) and Windstream Holdings, Inc. (WIN - Free Report)  faced similar issues from consumers and businesses regarding their requests to shut down Frame Relay and small to medium-sized business digital subscriber line services.

Meanwhile, in the last reported fourth quarter of 2016, the company’s performance in certain metrics were quite disappointing.

Winding Up

We are impressed with Cincinnati Bell’s strategic moves to consider customer satisfaction as one of the main criterions followed by the creation of job opportunities, which in a way brings betterment for the region’s economic development.

Moreover, Cincinnati Bell’s investment in fiber supports the growing Internet of Things (IoT) trend, which increases the usage of broadband connections along with smart home devices. Moving ahead, the company anticipates to continue growing its fiber footprint in 2017. Furthure, the company officials also said that they are creating a powerful customer support platform through investments in locally based universal call center agents.

Cincinnati Bell currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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