Windstream Mum On Possible Division Sale, Company’s Stock Snaps Out Of Slump
by August 19, 2015 9:47 pm 168 views
Market interest in Windstream Holdings, Inc. is gaining steam after a Wall Street financial news analysis site reported that the Little Rock telecom is looking to sell its Hosted Solutions data business, which was purchased from ABRY Partners in December 2010 in an all-cash deal for $310 million.
Following a DealReporter.com report on Aug. 13 that said the Arkansas Fortune 500 telecom was seeking to sell its nationwide division that offers cloud and managed services solutions, Windstream’s stock advanced in four straight sessions before cresting above $7 share earlier in the week.
Since touching a 52-week low of $4.42 on July 27, Windstream shares have awakened from a bearish slump and rebounded more than 42% in just over two weeks, regaining nearly $200 million in market cap as investors have eagerly snapped up the Arkansas telecom’s cheaply valued stock. Windstream’s shares rose to $7.02 in trading Monday on the Nasdaq stock exchange, but have lost ground since to end Wednesday’s session at $6.29, down 22 cents.
As expected, Windstream officials were mum concerning the DealReporter.com report, which said the Hosted Solutions was being offered by the Little Rock company at a price between $400 million and $500 million.
“As you are probably aware we don’t comment on rumors or speculation about mergers and acquisitions,” Windstream spokesman Michael Teague told Talk Business & Politics.
If indeed Windstream’s Hosted Solutions division is on the block, it would allow the Arkansas wireline phone service provider to continue paying down debt of more than $6.1 billion related to a string of acquisitions that have more than tripled the company’s size in the past six years.
In its second quarter earnings report on Aug. 6, Windstream posted a loss of $111 million, or $1.13 per share, compared to net income of $14 million, or 13 cents per share, a year ago. Total revenues for the quarter were essentially flat at $1.42 billion, compared to $1.47 billion a year ago.
Still, Windstream easily beat analysts’ expectations and Wall Street has responded well to the company’s April 14 spinoff of the newly created Communications Sales & Leasing Inc. (CS&L), Arkansas’ first publicly traded real estate investment trust (REIT).
In its 2Q report, Windstream said it has paid down $3.2 billion in debt in relation to the REIT spinoff that will provide nearly $170 million in annual interest savings. In addition, Windstream now owns nearly 20% of CS&L, currently valued at $686 million, and said it was committed to using the proceeds to continue reducing debt.
When Windstream purchased the Hosted Solutions business in late 2010, it operated five state-of-the-art data centers in Raleigh, N.C.; Charlotte, N.C.; and Boston, and served more than 600 customers. Windstream now operates a total of 12 data centers in eight states.
According to the company’s website, Windstream’s Hosted Solutions division now has a nationwide network of 27 data centers in 16 U.S. cities, including a 30,000 square foot state-of-the-art facility in Little Rock on Chenal Parkway that opened in April 2012.
In a related matter, Windstream announced Tuesday that it had partnered with Silicon Valley tech giant Hewlett Packard to provide innovative cloud and hosted solutions services.
“HP’s PartnerOne program will bring HP product innovation and R&D investment, enabling us to deliver better solutions to our customers,” said Rob Carter, Windstream’s vice president of data center marketing.