Author Topic: CTL - CenturyLink  (Read 33838 times)

jm25

  • Jr. Member
  • **
  • Posts: 77
CTL - CenturyLink
« on: February 04, 2014, 01:07:36 PM »
Telecom provider in the US offering Internet, TV and Voice to both consumer and residential. 13.7 million access lines in 37 states; 6.8 million broadband subscribers; 54 data centers.

$16.6 billion market cap; EV of $36.9 billion
Leverage of 2.8x
Trades at 5.0x 2013E EBITDA, 10.5x P/E
Company has flat to slight decline in growth.
P/BV of 1.0x (a lot of goodwill - negative TBV), Current ratio of 1.0x
Down 30% over the last year, 17% in the last 3 months.
Company cut its dividend in February 2013 and is now trading back down to the pre-cut dividend yield.

I'd love to hear your thoughts.



jm25

  • Jr. Member
  • **
  • Posts: 77
Re: CTL - CenturyLink
« Reply #1 on: February 05, 2014, 11:35:53 AM »
As a Canadian I don't know the product offering well like I would Telus / Rogers /Bell, it would be interesting to get someone else's views.

Is the potential for a goodwill write down scaring people away?

Valuehalla

  • Full Member
  • ***
  • Posts: 218
  • Who wants to earn forever
Re: CTL - CenturyLink
« Reply #2 on: February 01, 2017, 09:58:47 AM »
CTL Century Link plans to acquire LVLT Level 3 Communication. The acquisition shall be finished in Q3 2017. LVLT shareholders gets a one time payment of 26,50 $ per share and 1,4286 shares of CTL. While LVLT never paid a dividend, CTL is a strong dividend payer; 2,16 $ per share, shareprice today app 25,55 = 8,5 % dividendrate

Presentation:
http://ir.centurylink.com/Cache/1001215938.PDF?Y=&O=PDF&D=&fid=1001215938&T=&iid=4057179

I am now invested in both companies and i endorse it as a strong income-investment (app 9 % payout by dividends) with huge upside potential: app 35 % till end of 2017.

I am invested in LVLT long time, but was not in CTL in the past. When the detailed news about the acquisition came out, LVLT surged and CTL tanked, till CTL had a pricelevel with a dividendrate of nearly 10%. 22 US$ to 2,16 annual dividend in first days of November 2016. This was the moment when i also started to add CTL. Over the time - till now - i added app the same amount of money in CTL, that i have invested in LVLT. I think the whole position is hedged in that way (? ::)) , for the case the acquisition will fail.

I hope that everything will work out and i plan for this case to stay invested in the new formed company. CTL and LVLT announced they will maintain the annual dividend. I think they are able to do so this year and in the future as well, maybe even they will pay out more...

Why: In the future the whole dividend amount to pay out is app. 2,4 B $ per year. (CTL payed out 1,2 B in 2015, so concerning the future company 51:49:CTL:LVLT its app 2,4B$). The combined company is strong enough to do so. LVLT (which never paid out any $ dividend in the past) will bring in 1,1 B $ FCF. The synergies are estimated app 0,9 B $ and further CTL did share buybacks per year of app. 0,8 B $ in 2013/14/15. So to my mind .... no problem to stem the 2,4 B$.

If it will become more and more clear that the acquisition will work out and that the dividend could be paid, i expect that the price of CTL will surge till we have a dividendrate of maybe 6 or 7 %. (compare dividendrates of T and VZ) So CTL price for Q3 / end of 2017 could be around 31 to 36 $. 38 % upside potential to a price of 26 $ now. Concerning my own buying prices of LVLT and CTL i have now an avg dividendrate of 9,5 % on my whole package..a great income-investment ;D

Here are two statements supporting my view that the CTL dividendrate of 8,5 % (today) will be sustainable:

Philip Cusick: JP Morgan Analyst
http://www.cnbc.com/2017/01/03/jpmorgan-upgrades-telecom-stock-centurylink.html

Mason Hawkins: Longleaf Partners / Southeastern Asset Management
http://www.insidermonkey.com/blog/billionaire-mason-hawkins-and-his-teams-thoughts-on-alphabet-centurylink-more-495765/

Note: During Q3 2015 and in Q1,2,3 2016 Longleaf and Southeastern reduced their holdings in LVLT.. we will see Q4 actions soon

Now some negative aspect: soft shrinking revenue at CTL and stagnating or slow growing revenue at LVLT. Concerning LVLT there were several announcements that they expect the revenue increasing over time.. so we will see.. If that happens LVLT and CTL will surge even more :) to my opinion. Higher interest rates could effect the company cause of the debt.

Further - in summary - the whole company seems cheap to me, with a marketcap of 35B $ combined. I have in my mind that just LVLT invested 90 B $ for their fiber net. Marketcap of 35B$ compared to 4B$ from FCF and synergies, partly used for dividends/buybacks seems very attractiv to me.

Maybe he whole company seems to be attractive to a much more bigger player, who likes to buy a worldwide top fiber-network for a discountprice.....
« Last Edit: February 14, 2017, 06:36:32 PM by Parsad »
BRK FFH MKL LVLT CTL BAC WFC BMY MRK MCD MO PM

Valuehalla

  • Full Member
  • ***
  • Posts: 218
  • Who wants to earn forever
Re: CTL - CenturyLink
« Reply #3 on: February 03, 2017, 04:00:16 PM »
BRK FFH MKL LVLT CTL BAC WFC BMY MRK MCD MO PM

Spekulatius

  • Hero Member
  • *****
  • Posts: 673
Re: CTL - CenturyLink
« Reply #4 on: February 03, 2017, 04:31:18 PM »
To be a realist, one has to believe in miracles.

Ballinvarosig Investors

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 706
Re: CTL - CenturyLink
« Reply #5 on: February 03, 2017, 06:55:06 PM »
Valuehalla - are you ValueCarl from the original Level 3 posts?

Honestly, I have no position either way. I looked at Level 3 back in the day, I saw the value of the infrastructure, but (stupidly) I never bit.

Valuehalla

  • Full Member
  • ***
  • Posts: 218
  • Who wants to earn forever
Re: CTL - CenturyLink
« Reply #6 on: February 04, 2017, 05:42:49 AM »
Hi Ballinvarosig, no..I am not ValueCarl, just entered the forum a few days ago.

LVLT is still extrem cheap to my mind and additionally there is an upside gap of 6,43 % (Friday after close) to the acquisition-offer from CTL. (The upside gap was app 11% in the first days, after the acquisition offer came out.)

But I suggest to invest 50 % in LVLT and 50 % in LVLT. If the acquisition will fail, i think CTL price will rise and LVLT will tank. I have no doubt, that even CTL alone is able to pay the dividend.

On 8th Feb both companies will publish Q4 figures. I plan to swap a positions of LVLT into CTL before 28th Feb. Likely 28th Feb is the ex-div-day for CTL.  The lower the CTL price the better the swap.
« Last Edit: February 06, 2017, 07:40:42 PM by Valuehalla »
BRK FFH MKL LVLT CTL BAC WFC BMY MRK MCD MO PM

benhacker

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 779
Re: CTL - CenturyLink
« Reply #7 on: February 04, 2017, 05:44:22 AM »
Quote
BRK FFH MKL LVLT CTL BAC WFC BMY MRK MCD MO PM

Definitely not ValueCarl... his signature would have been LVLT^10. :)
Ben Hacker
Beaverton, Oregon - USA

Valuehalla

  • Full Member
  • ***
  • Posts: 218
  • Who wants to earn forever
Re: CTL - CenturyLink
« Reply #8 on: February 04, 2017, 09:31:55 AM »
Hi Spekulatius - Any serious theory why you prefer to run to the exit in case of CTL/LVLT or it was just a funny country saying, without any connection to my investmentproposal?
« Last Edit: February 05, 2017, 07:19:46 AM by Valuehalla »
BRK FFH MKL LVLT CTL BAC WFC BMY MRK MCD MO PM

benhacker

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 779
Re: CTL - CenturyLink
« Reply #9 on: February 05, 2017, 07:43:59 AM »
No Valuehalla, my zero-value post above was mostly just a joke for those of us who remember ValueCarl, a different poster who loved LVLT with all of his heart / soul.

I think Spek's comment above is very clear, so not sure what you were asking him....  He expressed no opinion on CTL/LVLT, but when people start making comments (which he quoted for clarity) that the "dividend is safe" that is generally when it no longer is safe.

I owned LVLT briefly years back for a nice gain, but haven't followed for years, I will step out of your discussion now.

Nothing more to say on LVLT / CTL, good luck!
Ben Hacker
Beaverton, Oregon - USA