Windstream reports 3Q loss, announces plans to sell CS&L stake worth nearly $600 million

Although reporting a third quarter loss, Windstream Holdings, Inc. beat Wall Street expectations on Thursday and said its balance sheet is improving as the Little Rock telecom continues to sell off noncore assets in its ongoing effort to pay down debt.

“The Windstream team is executing on all facets of our strategy and driving progress,” said Windstream President and CEO Tony Thomas.

In its third quarter financial statements, Windstream made the surprise announcement that at some point it plans to “monetize” its 20% stake in the Communications Sales & Leasing, the publicly-traded real estate investment trust that the company spun off earlier this year. The Fortune 500 telecom interest in CS&L is valued at $575 million, which when sold would go to pay down the company’s debt, officials said.

Windstream also announced the sale of its data center business for $575 million to privately-held TierPoint of St. Louis, which is partly owned by Stephens Group LLC. Thomas said the net proceeds from this transaction will enable debt reduction of nearly $300 million and fund Project Excel, a $250 million program that accelerates Windstream’s plans to upgrade and modernize the company’s broadband capabilities by year-end 2016, or two years ahead of the previous timeline.

“These network upgrades will provide a great customer experience, drive higher customer revenue and allow us to increase market share,” Thomas said.

For the period ended Sept. 30, Windstream reported a net loss of $7 million, or eight cents per share, compared to net income of $8 million, or seven cents per share, in the same period of 2015. The company’s sales rose slightly to $1.5 billion in the third quarter, up slightly from $1.46 billion in the same period of 2014.

Analysts surveyed by Wall Street forecasted the Little Rock telecom to report third quarter losses of 34 cents per share on revenue of $1.47 billion, according to Thomson Reuters.

In other moves to improve its balance sheet and enhance shareholder value, Windstream said it utilized secured debt capacity under its credit revolver to buy back $290 million in high-cost debt in the open market, allowing a reduction of 2017 maturities from $1.1 billion to $910 million outstanding and the repurchase of $100 million in longer dated bonds.

The Little Rock Fortune 500 company repurchased 3.1 million shares for $20 million during the quarter, part of a $75 million share buyback plan announced in August, which is expected to be completed by end of 2016. “Windstream is focused on returning value to our shareholders,” Thomas said.

Windstream also updated its capital spending plans to between $950 million and $975 million in fiscal 2015, $50 million less than previously announced.

Ahead of Thursday’s opening bell on the Nasdaq stock exchange, Windstream shares were holding at $6.33. The Little Rock company’s stock has traded in the range of $4.42 and $16.04 per share over the past 52 weeks.