CenturyLink, Inc. (CTL), Verizon Communications Inc. (VZ): I Wish This Was Simple

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In addition, there are three key measures for local telecom investors to keep an eye on. These companies need slow voice line declines, and fast growth in high-speed Internet and video subscribers. By these measures, CenturyLink isn’t doing as well as some of their peers.

When it comes to voice line losses, Verizon Communications Inc. (NYSE:VZ) is the only one of the four companies that doesn’t have to worry as much, because of this little division called Verizon Wireless. The local telecoms are in a different situation, because they need to limit the losses from their cash cow. By this measure, CenturyLink reported line losses of 7.1% versus a 5% decline at Windstream, and a 5.03% decline at Frontier.

High-speed Internet performance at CenturyLink, Inc. (NYSE:CTL) was equally middle of the road. Verizon reported high-speed Internet subscribers increased 3.36%, Frontier reported a 1.58% gain, and CenturyLink came in with a 1.13% gain. Windstream clearly lagged their peers with a decline of 5%.

The only measure where CenturyLink crushed the competition was in video additions. The company reported an 11.67% growth rate in video subscribers, which beat Frontier’s 5% growth, and Verizon’s 3.45% growth rate. Unfortunately for Windstream investors, their company finished last again with a loss of 4%.

So now what?
In the end, CenturyLink pays a lower yield than Frontier, and in two of the three “core” categories is under-performing. On the flip side, CenturyLink’s balance sheet carries half of the relative debt, and their payout ratio is lower.

Investors who already own CenturyLink should likely keep an eye on the company’s future earnings for continued deterioration in growth and margins. Continued pressure, coupled with improvements from Frontier, might be enough to make me pull the trigger and make a change. I’m staying put for now, but Frontier and their 9% yield looks awfully tempting.

The article I Wish This Was Simple originally appeared on Fool.com and is written by Chad Henage.

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