& cplSiteName &

Is Windstream Boldly Setting a New Trend?

Carol Wilson
7/29/2014
50%
50%

Windstream's bold move Tuesday to separate its services business from the underlying physical network could be just the first of many such moves within telecom. (See Windstream Spins Network Assets Into a REIT.)

In fact, as Windstream Communications Inc. (NYSE: WIN) spins off its physical network assets –- namely its copper and fiber distribution networks –- into a real estate investment trust (REIT), the new company is expected to sign up other communications service providers as "tenants," company executives said today.

Wall Street cheered the move, lifting Windstream's stock by nearly 14% to $11.99, and even boosting other telecom stocks in anticipation of other similar deals.

The move puts the low-growth, capital-intensive part of a telecom operation -- the access networks -- into one business, while enabling the original parent company to focus on higher-growth strategic efforts in the enterprise space.

Windstream executives this morning were promoting the deal as a positive for all involved –- its investors, its customers, and the two resulting companies, each of which will have a sound strategy going forward.

The deal "unlocks significant shareholder value" for Windstream investors, who get shares in the new company commensurate with their existing shares, and will receive dividends from both companies, says Windstream CEO Jeff Gardner.

For Windstream, the advantages are a massive reduction in its net debt -- to the tune of $3.2 billion -- made possible by payments from the REIT, enabling the company to move ahead more quickly with broadband expansion, the transition to an all-IP network, and additional new services for the mid-sized enterprise market it is targeting, he adds.

For consumer customers, the move means better access to broadband. The company is promising to expand the reach of its 10 Mbit/s broadband to 80% of its customers, while delivering 24 Mbit/s to 30% of its footprint.

As importantly, Gardner says, the company will be able to respond more quickly to new service demand in the enterprise space, where Windstream's network and cloud services target mid-sized businesses and often serve Tier 2 cities. (See Windstream Makes Regional Cloud Play and Windstream Portal Integrates Cloud, Network.)

"It's about better aligning with where we'd like to take the business, and [delivering] more flexibility to meet our business goals," the CEO comments. Noting the fast pace of change and the impact of mergers and acquisitions in the cloud and business services space, Gardner says the new Windstream will be more nimble and better able to respond.


Our NFV & the Data Center event digs deeper into how telecom service providers are evolving their data center strategies. You can check it out here on Light Reading.


The REIT, meanwhile, will initially have Windstream as an anchor tenant, but will be able to grow independently by physical expansion into other markets and by obtaining other tenants.

The deal, which has U.S. Internal Revenue Service approval but still needs state regulatory acceptance, is complex but straightforward. The new REIT will take on about $2.2 billion in Windstream debt in a straight debt-for-debt exchange, and also provide $1.2 billion in cash, which Windstream will use as part of its debt reduction plans. Windstream's net debt reduction, after fees and expenses, will be $3.2 billion.

— Carol Wilson, Editor-at-Large, Light Reading

(20)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
Page 1 / 2   >   >>
thebulk
50%
50%
thebulk,
User Rank: Light Sabre
7/31/2014 | 3:06:34 PM
Re: The rubber hits the road
FakeMitch, I see your point, but I am still skeptical. 
Mitch Wagner
50%
50%
Mitch Wagner,
User Rank: Lightning
7/31/2014 | 2:48:31 PM
Re: The rubber hits the road
thebulk - Simple regulations are better than complicated ones. The more complicated the regulation, the more susceptible it is to being thwarted by megabilliondollar companies with teams of high-priced lawyers. 

Separating pipes from service has the virtue of being nice and simple. Net neutrality proposals sound simple on the surface, but they get hairy the more they think about them. 
SachinEE
50%
50%
SachinEE,
User Rank: Light Sabre
7/31/2014 | 6:23:41 AM
Logic
Who wouldn't want to be 3.2 million dollars less in debt? Its just amazing how the thought process behind this was move came about, the move not only reduces losses but enables the company to move forward with broadband expansion and additional services, I hope it's a move that will be followed by the rest because no doubt, its going to be very successful.
SachinEE
50%
50%
SachinEE,
User Rank: Light Sabre
7/31/2014 | 6:14:53 AM
Why Windstream Has A Promising Future
This move by Windstream has quite a lot of benefits to both he members who act as executives, the employees and the customers who get their services from this company. The inventors get to get the shares from both the telecom and the windstream company which is very profitable to them. Customers will be able to get fast and efficient services as they will be quick service respond. The customers also are able to quickly access broadband. The windstream company certainly has a promising future seeing what telcom has been able to achieve over time.
mendyk
50%
50%
mendyk,
User Rank: Light Sabre
7/30/2014 | 8:50:02 AM
Re: Magic
If the aggregate share prices of the two separate entities is greater than the original share price used to be, then mission accomplished. If not, then this is a fail from the corporate perspective. Remember when Ziff spun out Key3 Media? Same principle here. Let's hope for Windstream's sake the result is different
thebulk
50%
50%
thebulk,
User Rank: Light Sabre
7/30/2014 | 5:28:59 AM
Re: The rubber hits the road
Is it really a possible solution or just a work around to Net Neutrality? I am skeptical... 
brooks7
50%
50%
brooks7,
User Rank: Light Sabre
7/29/2014 | 9:13:29 PM
Re: Magic
Marc,

It goes something like this....

Would you rather own an access network - which is NOT the pipes Mitch - or would you rather be RingCentral (as an example)?

The access network is an asset that is a depreciating physical plant that needs maintenance and upgrade.  It is a low to no growth business at best, a declining one more likely.  The good news is that its hard to replicate so won't have a lot of competition.  So possible cash flow, but not a rising share price.  On top of that, the note of people leasing the network is pretty funny.  Companies can already do that through UNE-L.  Why would they start now?

The services business has a lot of potential growth but a lot of competitors.  If you really want to be a Cloud Company, you should plan to have a solution that gets connected over the Public IP network.  If you are connected to data centers over Public IP networks, then essentially all bandwidth is created equal and is a commodity.  There are Enterprise Apps that need different connectivity, but things like Salesforce.com work quite nicely without owning a single customer network or requiring a VPN.

I have put forth for a long time that network providers have no advantage in building Cloud Apps and this is why.  It is not clear to me that integrating 3rd party products (like RingCentral) is a great model.  The SW development houses (Amazon, Google, IBM, Microsoft, Salesforce) are doing a LOT better than the deployment houses.  But for no plant, you can be in the voice business by buying a VoIP switch.  Rent some Data Center Space and poof you are Vonage.

seven
Mitch Wagner
50%
50%
Mitch Wagner,
User Rank: Lightning
7/29/2014 | 8:55:25 PM
Re: The rubber hits the road
This kind of thing is a potential solution to the net neutrality problem -- one company owns the pipes, other companies provide the service. 
Mitch Wagner
50%
50%
Mitch Wagner,
User Rank: Lightning
7/29/2014 | 8:53:09 PM
Re: Magic
If you stick feathers on a dog and call it a falcon, will it fly?

Don't think you're trying that on my dog, buster. 
MarkC73
50%
50%
MarkC73,
User Rank: Light Sabre
7/29/2014 | 7:18:41 PM
Re: Magic
I'm not sure if I'm on the camp of 2 halves are greater than a whole.  I guess I'll dig deeper in what the restructuring really means to both sides, or just wait and see what happens.  Because I don't really see the difference between 'tenants' of tomorrow and wholesale customers of today.  Financially, not burdening the two sides, smells of spin off opprotunity to me.
Page 1 / 2   >   >>
From The Founder
The independent evaluation of Nokia's key virtual network functions (VNFs) was a defining moment for the Finnish giant.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
LRTV Custom TV
Energy 2020: Growing Services, Not Consumption

6|24|16   |   07:18   |   (0) comments


Management of power requirements needs to be a key consideration as cable operators deploy new services, says Dan Cooper, vice president of critical infrastructure for Charter Communications and chair of the SCTE/ISBE Standards Program's Energy Management Subcommittee. In this video, Cooper discusses the importance of cable operators and technology partners ...
LRTV Huawei Video Resource Center
Huawei & TDC First to Launch DOCSIS 3.1 Trial in Europe

6|24|16   |     |   (0) comments


To meet the rising demands for high-speed broadband and to tackle fierce competition for 1.5 million household, TDC wanted to upgrade its network to use the latest technology. Using Huawei's DOCSIS 3.1 solution, TDC is now able to offer gigabit speeds to its customers.
LRTV Documentaries
OPNFV Summit: Key Takeaways

6|22|16   |   03:28   |   (0) comments


MANO shortfalls, an increasingly bloated open source ecosystem and the cultural challenges for network operators were among the key takeaways from the OPNFV Summit in Berlin.
LRTV Huawei Video Resource Center
Bringing Ultra Broadband to the South Pacific

6|22|16   |   7:55   |   (0) comments


At Singapore's UBBS 2016 summit, Light Reading speaks to Lim Chee Siong, Huawei's CMO in the South Pacific Region.
LRTV Custom TV
Juniper's NFV Platform

6|22|16   |     |   (0) comments


A telco cloud is a key enabler for service providers to deliver virtualized services to their customers. Juniper has a differentiated approach with an open and comprehensive NFV platform to build the cloud of the future for multiple use cases.
Women in Comms Introduction Videos
Infinera: The Glass Ceiling's Been Broken

6|22|16   |   4:34   |   (0) comments


Shannon Williams, an engineer by trade and now the director of sales for Infinera's major accounts, draws confidence from being a female in a male-dominated industry and hopes other women will too as industry dynamics swing in our favor.
LRTV Custom TV
RAD Demonstrates SD-WAN Functionality at BCE 2016

6|22|16   |     |   (0) comments


In conjunction with Versa Networks, RAD demos a joint solution for SD-WAN implementation. The solution uses RAD's ETX-2i, a vCPE platform integrating a powerful IP and Carrier Ethernet NID/NTU with a field-pluggable x86 NFV module that runs Versa's FlexVNF for SD-WAN functionality. The demo implements SD-WAN over a simulated service provider footprint by deploying ...
LRTV Custom TV
Radware on Virtualizing Network Security

6|21|16   |     |   (0) comments


Radware's Michael O'Malley highlights the benefits for service providers of virtualizing network security.
LRTV Huawei Video Resource Center
Huawei 2016 UBBS World Tour: Singapore

6|21|16   |   02:39   |   (0) comments


Highlights from Huawei's UBBS World Tour event in Singapore.
LRTV Custom TV
The FlowBROKER Solution

6|21|16   |     |   (0) comments


During a demo at the Big Communications Event 2016, Accedian director of product line solutions Greg Spear demonstrates how the FlowBROKER distributed packet capture solution (part of Accedian's SkyLIGHT platform) can be used to troubleshoot and resolve QoE issues.

FlowBROKER is the industry's first lossless remote packet capture solution, which uses ...

LRTV Documentaries
BCE 2016: Dell & the New World Order

6|21|16   |   22:48   |   (0) comments


Dell's Jim Ganthier on how the very essence of enterprise is being affected by digital disruption – and how the cloud can help companies find a path forward.
LRTV Documentaries
BCE 2016: The CSP of the Future

6|20|16   |     |   (0) comments


Traditional telecom operators have been adopting new ways of doing business from the IT sector and emulating web-scale companies in their technology adoption. Are these strategies succeeding? A panel of experts at BCE considered the evidence...
Upcoming Live Events
September 13-14, 2016, The Curtis Hotel, Denver, CO
November 3, 2016, The Montcalm Marble Arch, London
November 30, 2016, The Westin Times Square, New York City
December 6-8, 2016,
May 16-17, 2017, Austin Convention Center, Austin, TX
All Upcoming Live Events
Infographics
A new survey conducted by Heavy Reading and TM Forum shows that CSPs around the world see the move to digital operations as a necessary part of their overall virtualization strategies.
Hot Topics
FCC to Vote on 5G Spectrum on July 14
Dan Jones, Mobile Editor, 6/20/2016
'Brexit' Vote Hits BT, Vodafone
Iain Morris, News Editor, 6/24/2016
AT&T Settles on LTE for Cellular IoT
Dan Jones, Mobile Editor, 6/22/2016
Google Fiber Buys Webpass in Wireless Play
Iain Morris, News Editor, 6/23/2016
Arista Could Face US Import Ban – Reports
Mitch Wagner, West Coast Bureau Chief, Light Reading, 6/23/2016
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
At the BCE 2016 show in Austin, ECI Telecom CEO Darryl Edwards tells Light Reading founder and CEO about the Elastic Network concept and the company's NFV and cybersecurity developments.
Mark Dzuban, president and CEO of SCTE/ISBE, sits down with Steve Saunders in Light Reading's New York office to discuss the society's Energy 2020 campaign, including its mission to benefit the environment, enable economic benefits and the key challenges facing cable operators wanting to reduce energy consumption.
Animals with Phones
Live Digital Audio

Our world has evolved through innovation from the Industrial Revolution of the 1740s to the information age, and it is now entering the Fourth Industrial Revolution, driven by technology. Technology is driving a paradigm shift in the way digital solutions deliver a connected world, changing the way we live, communicate and provide solutions. It can have a powerful impact on how we tackle some of the world’s most pressing problems. In this radio show, Caroline Dowling, President of Communications Infrastructure & Enterprise Computing at Flex, will join Women in Comms Director Sarah Thomas to discuss the impact technology has on society and how it can be a game-changer across the globe; improving lives and creating a smarter world. Dowling, a Cork, Ireland, native and graduate of Harvard Business School's Advanced Management Program, will also discuss her experience managing an international team focused on innovation in an age of high-speed change.