Is Sprint (S) a match for CenturyLink (CTL)? CTL is the largest U.S. telecom company that lacks...


Is Sprint (S) a match for CenturyLink (CTL)? CTL is the largest U.S. telecom company that lacks a wireless business, and Sprint needs a partner with AT&T (T) acquiring T-Mobile (DTEGY.PK). CTL has "a really good balance sheet and looking for areas to invest its capital... If Sprint can stabilize and then begin to grow its customer base, it becomes a growth vehicle for them."

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Comments (3)
  • Duude
    , contributor
    Comments (3413) | Send Message
     
    CenturyLink is spending 75% of their cash flow on their dividend. Unless, Sprint is interested in an all stock deal, and current investors can withstand stagnation to their current dividend growth strategy, I don't see it happening.
    17 May 2011, 09:47 AM Reply Like
  • briley85
    , contributor
    Comments (5) | Send Message
     
    Interesting to note/remember that Sprint actually spun-out their local wireline telco in 2005, formerly called Sprint LTD (Local Telecom Division), to create the standalone company Embarq. Embarq was then acquired by CenturyTel to create CenturyLink, and CenturyLink went on to acquire Qwest as well. Prior to these acquisitions, CenturyTel actually divested its wireless business (sold to Alltel) in 2002, and Alltel Wireless (post-Windstream spinout) was acquired by Verizon in 2008.

     

    It seemed to be the "popular" mode of operation in the early- to mid-2000's for Tier 2 NLECs (national local exchange carriers) to separate their wireline and wireless operations into standalone entities, ala Sprint / Embarq and Alltel / Windstream, whereby the Tier 1's chose to operate in a more vertically integrated, end-to-end service model.

     

    What growth opportunities would a re-combination of Sprint and Embarq / CenturyTel / Qwest provide? Are you thinking they would acquire existing enterprise customers (mainly from Qwest) and migrate them from connectivity services to cloud computing services?
    17 May 2011, 10:16 AM Reply Like
  • catamount
    , contributor
    Comments (381) | Send Message
     
    Thanks for all the insight on the history, I wasn't so clear on those details.

     

    I think your last suggestion is on target, and when the Savvis acquisition is completed, CTL's cloud infrastructure should be as good as it gets.

     

    On the consumer side, however, it looks like we are finally seeing the "convergence" that has been talked about for so long, so the synergies of wireline/ wireless make more sense now than ever. Cross-sell/ upsell opportunities abound, and a "quadruple play" is a great way to simplify things for consumers (one bill) and the operator (i.e. increase APRU). CTL could also offload to wireline when customers are at home.
    17 May 2011, 07:50 PM Reply Like
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