John Leonard, CFA
Special situations, micro-cap, contrarian, CFA

Otelco Is An Attractive Post-Reorg Investment

Otelco (NASDAQ:OTEL) is undervalued due to non-existent coverage in the investment community after recently emerging from a pre-packaged bankruptcy

Company overview

OTEL provides telephone, television and internet access to customers in Alabama, Maine, Massachusetts, Missouri, New Hampshire, Vermont and West Virginia. OTEL operates 11 rural local exchange carriers (RLEC) and three competitive local exchange carriers (CLEC). OTEL is among the top 25 largest local exchange carriers in the U.S. based on number of access lines.

The core telephone business (local services and network access segments) represents ~76% of total revenues in FY12 while cable, internet and transport services represent the remainder.

Investment thesis

OTEL represents a textbook post-reorg investment that Joel Greenblatt discusses in his excellent book "You...

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