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Cincinnati Bell-YouTube TV Boost On-Demand Streaming Services

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Cincinnati Bell Inc. (CBB - Free Report) , with its subsidiary Hawaiian Telcom, has partnered with YouTube TV, an over-the-top Internet television network, to deliver the latter’s offerings in Greater Cincinnati and Hawaii. The move underscores the telephone company’s commitment to reinforce competitive products and services in the regional market while addressing the increasing demand for fiber capacity through cost-efficient content platforms.

Per the deal, YouTube TV will provide access to more than 70 cable and broadcast networks such as ESPN, FOX, CNN, NBC and HGTV with unlimited storage capacity, uninterrupted streaming, and live nationwide and local coverage, without any baffling long-term contracts. Backed by high-speed Internet connection, the video sharing platform enables the distribution of its subscription-based streaming plan with personalized recommendations to six accounts per household with a personal digital video recorder.

The distribution contract for YouTube TV comes after the service struck a similar deal with Verizon VZ last year. Supported by exceptional fiber density and operational efficiency, the agreement will enable YouTube to reach more customers while aiding the cord cutters to conveniently manage multiple bills. Primarily targeted at Fioptics TV customers, the agreement will accelerate Cincinnati Bell’s predominant strategy to create a differentiated and balanced revenue mix by expanding its high-bandwidth fiber optic network as customers migrate from legacy services to advanced fiber offerings.

Cincinnati Bell’s efforts to evolve from a legacy copper-based telecommunications company to an IT firm with contemporary fiber assets, offering seamless network solutions to both consumer and business customers, are remarkable. Its move to prioritize customer satisfaction, followed by the creation of job opportunities augurs well for the region’s economic development.

Notably, the company’s investment in fiber supports the growing IoT trend, which proliferates the usage of broadband connections, along with smart-home devices. Claiming to future-proof 50% of its network services, Cincinnati Bell is undergoing a drastic transformation to upgrade its network infrastructure to the next-gen fiber. This will support the burgeoning demand for data and accelerate 5G mobile technology growth.

However, the company continues to experience erosion in high margin local access lines. With Digital Subscriber Line and cable modems gaining widespread acceptance, customers are deactivating the extra phone lines that were used to access the Internet via dial-up modem.

The shift to wireless services, along with aggressive rollout of VoIP and long-distance services by Tier-1 competitors in Cincinnati and Dayton, has further contributed to access line erosion. Also, the company is facing competitive threats from local cable operators that aggressively deploy local phone service in addition to television. This has already resulted in the loss of major business customers.

Backed by proper execution of its operational plans, the stock has rallied 26.6% against the industry’s decline of 29.3% in the past year.

Cincinnati Bell currently has a Zacks Rank #4 (Sell).

A couple of better-ranked stocks in the industry are Telefonica Brasil S.A. VIV and Telefonica, S.A. TEF, both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Telefonica Brasil has a long-term earnings expectation of 8.6%.

Telefonica has a long-term earnings growth expectation of 9.2%.

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