CenturyLink Wins New Contract - Analyst Blog

Telecommunication service provider, CenturyLink Inc. CTL announced its latest contract win from the U.S. Marine Corps Combat Development Command in Quantico, Virginia and the Marine Corps Barracks in Washington, D.C. The new deal, worth $8.5 million and for a period of two years, entails CenturyLink to provide voice, data network and telecommunications infrastructure services.

CenturyLink has been successful in winning new contracts from various organizations including Federal Communications Commission (FCC). Previously, the company received contracts under the Networx Enterprise deal worth $9.6 million from General Services Administration (GSA). This involved the deployment of Wide Area Network (WAN) services to the FCC, inclusive of private-line services and Network-Based Internet Protocol Virtual Private Network Services.

Moreover, it also received $20 million from the U.S. General Services Administration (GSA) to offer Voice over Internet Protocol (VoIP) services to GSA over a period of five years beginning 2012. We believe the company's business growth will likely enable it to increase its market penetration and also fend off competition from the likes of Frontier Communications Corporation FTR and Telephone & Data Systems Inc. TDS.

Further, CenturyLink is concentrating on expanding the business base of its subsidiary Savvis, which has contributed immensely in uplifting its performance level through cloud computing and managed hosting solutions for enterprises. This has helped the company in spreading its wings in the enterprise market and enabled it to gain prominence for providing key enterprise solutions various business entities.

In this regard, CenturyLink acquired Platform-as-a-Service (PaaS) provider – AppFog. This acquired unit – which extends custom-made PaaS capabilities to software developers and public cloud services through www.appfog.com – will augment the product portfolio of Savvis. We view this acquisition as a growth driver as AppFog's high-quality Platform-as-a-Service offerings along with Savvis' industry-leading infrastructure base will likely create a secure and reliable network for developing applications in the cloud.

Additionally, demand for managed hosting solutions from customers remains strong as they look to reduce expenses and enhance efficiency by using these products. CenturyLink also extended its partnership with VMware Inc. to introduce the vCloud Hybrid service in its North American Savvis Data Center.

CenturyLink currently has a Zacks Rank #3 (Hold).

Stocks That Warrant a Look

Better-ranked stocks in this sector include Inteliquent, Inc. IQNT, which has a Zacks Rank #2 (Buy).