CTL

CenturyLink Inc

TMT


Presented:05/15/2019
Price:$10.95
Cap:$11.94B
Current Price:$6.18
Cap:$6.28B

Presented

Date05/15/2019
Price$10.95
Market Cap$11.94B
Ent Value$48.05B
P/E RatioN/A
Book Value$12.42
Div Yield8.97%
Shares O/S1,090.31M
Ave Daily Vol13,871,719
Short Int9.33%

Current

Price$6.18
Market Cap$6.28B
CenturyLink, Inc. is an investment holding company, which engages in the provision of integrated communications to residential and business customers. It operates through the Business and Consumer segment. The Business segment offers local and long-distance voice, VPN data network, private line, Ethernet, information technology, wavelength, broadband, colocation and data center services, managed services, professional and other services provided in connection with selling equipment, network security, and various other ancillary services to small, medium and enterprise business, wholesale and government customers, and other communication providers. The Consumer segment provides broadband, local and long-distance voice, video, and other ancillary services to residential customers. The company was founded in 1930 and is headquartered in Monroe, LA.

Publicly traded companies mentioned herein: CenturyLink Inc. (CTL), Frontier Communications Corp (FTR), T-Mobile US Inc (TMUS)

Highlights

The presenter is short shares of CenturyLink (CTL), a telecom company serving both enterprise and consumer segments globally. There has been an irreversible secular trend of IP migration over the past 3 - 5 years that adds pressure to the business, and the presenter noticed that management is relying on inorganic ways to maintain free cash flow generation. He believes that declines in revenue and cash flow will accelerate through the end of 2019 and into 2020 and, as a result, the multiple should contract. The same setup was seen with Frontier Communications, and its stock price declined from $52 to $2. Using a similar framework, CTL would be more fairly valued in the $6 - $8 range (vs. $11 today) in the short term.

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Idea Discussion

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