Cincinnati Bell Inc. CBB is well balanced on factors like increased investments in innovative product development, high-speed Internet offerings and higher managed service demand. The company’s Wireline segment stands as the prime growth driver with strength in the Fioptics business arising from continuous fiber deployment.
Cincinnati Bell is focused on transforming the company into a fiber-based communications, entertainment and IT solutions company. With a well-designed marketing program, popular brand value and strong reputation, the company expects to boost its wireline revenues going forward.
Increased investments in strategic products are expected to open up ample opportunities for the company, thus enhancing revenues and profits. Continuously growing demand for high speed Internet is poised to boost the company’s strategic revenues from business customers. Bolstered by these positive factors, the company issued a revenue and adjusted EBITDA projection of approximately $1.1 billion and $297 million (plus or minus 2%), respectively, for 2015, excluding the wireless segment.
On the flip side, Cincinnati Bell continues to experience erosion in high margin local access lines. With Digital Subscriber Line (DSL) and cable modems gaining widespread acceptance, customers are deactivating the extra phone lines that were used to access the Internet via dial-up modem. In addition, the shift toward wireless services and aggressive rollout of VoIP and long distance services by Tier-1 competitors such as AT&T and Verizon in Cincinnati and Dayton has further contributed to access line erosion.
The company exited the fourth quarter of 2014 with 82,400 wireless subscribers, including 43,500 and 38,900 of post-paid and prepaid customers, respectively. This compares unfavorably with 339,700 wireless customers recorded in the year-ago quarter and 176,800 in the preceding quarter.
Key Picks from the Sector
Some well-placed stocks in the same space are Chunghwa Telecom Co., Ltd. CHT, Vonage Holdings Corporation VG and China Unicom (Hong Kong) Limited CHU.
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