WIN, FTR, CTL soar on REIT news; AT&T/Verizon/Sprint gain


Windstream's (WIN +22.3%) plans to spin off some of its telecom network assets into a REIT (following a favorable IRS ruling) has lit a fire under U.S. telecom carriers, as investors bet more REIT announcements will happen. Some might also be hoping REIT spinoffs spark additional M&A activity in an industry that has seen plenty of it.

Frontier (FTR +15.8%) and CenturyLink (CTL +8.1%) are also off to the races, and AT&T (T +3.9%), Verizon (VZ +1.9%), and Sprint (S +2%) aren't doing badly either.

Other gainers include Alaska Communications (ALSK +5.2%), TDS (TDS +4.1%), and Lumos Networks (LMOS +5.5%), as well as Level 3 (LVLT +5.9%) and merger partner TW Telecom (TWTC +5.2%). Level 3 posted a Q2 beat this morning.

Windstream's spinoff will feature its fiber/copper networks and other real estate. The company expects to retire $3.2B in debt following the spinoff (expected to close in Q1 2015), and to have the REIT raise $3.5B in debt.

Windstream plans to have an aggregate annual dividend of $0.70/share following the spinoff ($0.60 for the REIT, $0.10 for Windstream proper). That's down from a current $1.00/share.

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Comments (5)
  • rgperrin
    , contributor
    Comments (1590) | Send Message
     
    I remember when Frontier Communications had a $1.00 dividend. Then, the dividend was cut to $0.75 in a plan to shore up the company for a better future, etc. Now, Frontier pays $0.40, and its future is far for certain.

     

    Today, Winstsream announced that it will cut its $1.00 dividend to $0.70 in a plan to shore up the company for a better future, etc.

     

    I guess time will tell. But it seems as if I have been down this road before, and the trip didn't end well.
    29 Jul 2014, 10:35 AM Reply Like
  • Raleigh Reid
    , contributor
    Comments (226) | Send Message
     
    interesting that this is a done deal and there was no advance commentary. it will likewise be interesting to see how the numbers play out.
    29 Jul 2014, 10:45 AM Reply Like
  • Philip Marlowe
    , contributor
    Comments (1581) | Send Message
     
    Wow so they are cutting the dividend. You gotta hand it to them, they know how to do their marketing. I would have never guessed their shares would shoot up 22% when they announce a dividend cut.
    29 Jul 2014, 11:37 AM Reply Like
  • left_coaster
    , contributor
    Comments (85) | Send Message
     
    Took profits in FTR and will move on.
    29 Jul 2014, 11:37 AM Reply Like
  • Mo Money 2011
    , contributor
    Comments (78) | Send Message
     
    Isn't the 22% spike because of the REIT ruling? In effect, the firm gets favorable income tax treatment on the REIT portion of the business, and that helps the bottom line. Although the dividend cut doesn't seem like they're willing to pass on any of this to investors.
    29 Jul 2014, 04:26 PM Reply Like
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