CenturyLink Plans Share Buyback - Analyst Blog

Telecommunication service provider, CenturyLink Inc. (CTL) announced a stock repurchase program of up to $1 billion of its common stock over a period of one year. This new share buyback plan will follow the existing share repurchase, which is expected to close in the second quarter of 2014.  

With the aim of offering healthy returns to its shareholders, the company repurchased 50.8 million shares through Feb 11, aggregating $1.72 billion since the inception of a $2.0 billion buyback program initiated in Feb 2013.

We believe the company's commitment to return shareholders' value stems from its increased financial strength. CenturyLink generated operating cash flow of $7,432 million in 2013, while free cash flow was $3,071 million.

Apart from balance sheet, the company is also progressing with its business growth. CenturyLink redesigned its operating segments to strengthen its grip over the market as well as remain fully committed to wholesale, consumer and hosting customers.

The company, over the last few years, has been witnessing a slower rate of revenue declines and expects the trend to continue in 2014. The primary factors contributing to this include long-standing ties with clients by bundling integrated services, launch of new and attractive services, consistent technology upgrades, infrastructure enhancement, better usage of networks and profitable collaborations.

CenturyLink is also benefiting from its continuous investments in Product portfolio, which places it as an integrated end-to-end solution provider to various businesses. CenturyLink's Prism TV service is performing well and is expected to compensate for the revenue loss due to reduction of single play voice customers. The company also remains committed to take Prism TV service to additional markets.

However, stiff competition from operators like Leap Wireless International Inc. (LEAP), Frontier Communications Corp. (FTR) and Windstream Holdings Inc. (WIN), deteriorating legacy voice and access revenues, regulatory issues and constant need for technology upgrades may impact the company's operating performance.

CenturyLink has a Zacks Rank #3 (Hold).