One of the leading integrated telecommunications service providers, CenturyLink, Inc. (CTL) received two contracts from the Federal Communications Commission (FCC), which is expected to generate a cash flow of $9.6 million over a five-year period.
The company received both the contracts under the General Services Administration's Networx Enterprise deal (GSA).
The new contract entails deployment of Wide Area Network (WAN) services to the FCC inclusive of private-line services and Network-Based Internet Protocol Virtual Private Network Services. Moreover, CenturyLink bagged another contract to offer Managed Trusted Internet Protocol Services (MTIPS) to the FCC. The MTIPS contract was valued at $2.64 million over the next five years, generating $472,000 in the first year followed with $2.17 million over the next four years.
Few days back, CenturyLink received $20 million from the U.S. General Services Administration (GSA) to offer Voice over Internet Protocol (VoIP) services to GSA over the next five years. The VoIP solution will include hosted and premises-based services covering GSA Region 8 offices in Colorado, Montana, North Dakota, South Dakota, Wyoming and Utah.
CenturyLink has successfully undertaken integration and operation of the Embarq properties, mitigating the rate of access line loss and meeting customer demand for high-speed Internet and high-bandwidth services. We believe that the acquisitions of Qwest and Savvis will significantly enhance CenturyLink's position as a global communications leader and strengthen its ability to drive long-term shareholder value.
However, stiff competition from other low cost telecom operators’ like LEAP Wireless International Inc. (LEAP) and significant integration challenges coupled with increased operating expenses resulting from the acquisitions may impede the company’s operating performance going forward. Hence, we maintain our long-term Neutral recommendation on CenturyLink.
Currently, it has a Zacks#3 Rank, implying a short-term Hold rating on the stock.
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