Frontier Communications Corp (FTR), CenturyLink, Inc. (CTL): Regional Telcos That Are Riskier Than You Think

Between Wednesday afternoon and Thursday morning, three of the riskiest regional telcos will step up to report fresh quarterly results.

Frontier Communications Corp (NASDAQ:FTR) and CenturyLink, Inc. (NYSE:CTL) report after tomorrow’s market close. Windstream Corporation (NASDAQ:WIN) follows the next morning.

Frontier Communications Corp (NASDAQ:FTR)All three companies are expected to post declining quarterly revenue, and Frontier Communications Corp (NASDAQ:FTR) and Windstream Corporation (NASDAQ:WIN) are eyeing steep drops in profitability. Two of the companies have slashed their dividends over the past year, yet they are still offering juicy payouts that nab unsuspecting income investors.

Things can still play out well for the regional telcos, but it’s important to understand where they are now, and where they are heading.

Revenue is slipping at all three companies — and it’s expected to drop between 2% and 8% for the regional telcos — because folks are cutting their landlines.

This isn’t a surprise. Folks are nixing their local phone service to save up for their costly wireless plans. Until we see some stability there, investors are merely playing a game of limbo here.

Let’s size up the upcoming reports and yields as of Monday’s close.

Company Latest Quarter

EPS (estimated)

Year-Ago

Quarter EPS

Yield
Windstream $0.09 $0.12 11.6%
Frontier Communications $0.05 $0.08 8.8%
CenturyLink $0.67 $0.65 6%

Source: Yahoo! Finance.

As you can probably imagine, Windstream Corporation (NASDAQ:WIN) is the lone holdout when it comes to hacking away at its quarterly distributions.

Frontier Communications Corp (NASDAQ:FTR) cut its quarterly dividend from $0.25 a share to $0.1875 a share three years ago, and again to $0.10 a share last year. CenturyLink, Inc. (NYSE:CTL) went from distributing $0.725 a share every three months to $0.54 a share earlier this year. Class action lawsuits are piling up against CenturyLink, accusing it of misleading investors leading up to this year’s payout cut.