CTL - CenturyLink

[Valuehalla]

THX for postings & comments

I fully agree with the content of the article in the peridotcapitalist as well

[BeerBBQ]

How relevant is the FCC vote on net nuetrality going to be to CTL?

[Valuehalla]

Concerning the FCC I published some remarks and news here in the past.

 

IMO the more liberal, the more deregulated, the better for CTL, cause they own the net.

With LVLT one of the biggest nets in the world.

 

Under Ajit Pai I think it looks good.

 

Final vote is expected for 14th December. Details next week.

 

http://www.reuters.com/article/us-usa-internet/fcc-plans-to-vote-to-overturn-u-s-net-neutrality-rules-in-december-sources-idUSKBN1DG00H

[Valuehalla]

Revenue Projektion for CTL & LVLT

 

Based on the 2017 Q3 figures and the developments of the past, I have done a projection of the revenue, splitted into the segments as reported.

 

Find the file enclosed.

 

The revenue of LVLT is totally healthy!

All segments are stable since long time.

One segment "IP&Data" is increasing app 4 % YoY, which results in a slightly increasing total revenue.

 

CTL has also one segment which is increasing app 3 to 5 % YoY. Most CTL segments are stable as well. Legacy revenues are shringking app. 10 % per year.

 

In the long run the increasing segments, will offset the shrinking revenue segments, as shown in the projection enclosed. From the total revenue 30 % is increasing app 3 to 5 % YoY, 40 % is totally stable and 30 % is shrinking app 10% YoY

 

Right now, the total revenue is just shrinking softly: 1,8 % YoY

So its all about margins >> synergies and in my opinion it is not so hard, to create a turn around.

 

LVLT_CTL_Revenue_Projection.pdf

[BeerBBQ]

In the LVLT thread, LVLT was said to be the lowest cost provider.  What gives them that advantage?

[Valuehalla]

FCC Ajit Pai concerning net neutrality:

 

https://www.tellusventure.com/downloads/fcc/2017/fcc_press_release_title_ii_21nov2017.pdf

 

https://www.tellusventure.com/downloads/fcc/2017/fcc_draft_order_title_ii_22nov2017.pdf

 

 

Steve Blum:

 

"The Federal Communications Commission’s draft common carrier order is an unconditional surrender to the demands and desires of big cable and telephone companies."

 

https://www.tellusventure.com/blog/the-dingo-is-in-the-details-as-fcc-reverses-common-carrier-decision-preempts-state-broadband-laws/

 

[Valuehalla]

In the LVLT thread, LVLT was said to be the lowest cost provider.  What gives them that advantage?

 

I have no further information about it.

 

From the side of the balance sheet, the EBITDA margin of LVLT was increasing during the last years, now 36,5 % of total revenue. The EBITDA margin of CTL was shrinking in 2016 and 2017, now 34,6 % (in 2014 and 2015 always around 38 %)

[Valuehalla]

Story and Patel were on a UBS conference yesterday:

 

- confirmed the dividend

- taxreform is positiv for CTL

- positive outlook concerning profitability of revenue & synergies

[Valuehalla]

CTLs Conclusion of spcial commitee investigation:

http://ir.centurylink.com/Cache/391376197.pdf

 

 

The Lawsuit of Minnesota’s attorney general, Lori Swanson:

https://www.dslreports.com/r0/download/2324271~dc03044c279e65ddf233a11e334209f5/Lawsuit.pdf

[Valuehalla]

Mason Hawkins  (CEO Southeastern Asset Management) activity in Q3 2017 concerning LVLT:

 

Shares hold on 29.09.2017

 

Longleaf Partners Fund                            increased  = + ? %          (end of Q2=  5.958.138)

Southeastern Asset Management Inc      27.783.714  = +2,16 %        (end of Q2= 27.194.043)

Longleaf Partners Smallcap Funds            5.717.590  =  +/- 0 %        (end of Q2=  5.717.590)

 

The mentioned "vehicles" accumulate app. ? % of LVLT at the end of Q3 2017

 

"Level 3 Communications (-10%,-1.08), the global fiber and

integrated communications network company, was the only

notable detractor from the Fund’s return in the quarter. The

size of the position magnified the impact of the stock’s decline.

We maintained a 10% weight and added in the quarter in

anticipation of the close of CenturyLink’s (CTL) purchase

of the company. Because we will receive approximately

half of the transaction in cash, the combined company will

become a more normal 5% position. In the quarter, Level

3’s price reflected concerns about final deal approvals and a

potential CTL dividend cut post-deal (as inferior competitors

have cut dividends this year). On the first day of the fourth

quarter, the Department of Justice gave a key approval to

the merger. The prospective cash flow from the combination

with Level 3 should easily cover CTL’s current dividend which

was otherwise in question given its declining legacy land

line business. The dividend is irrelevant to the company’s

underlying value and has taken on undue importance in

this environment of intense yield chasing. We anticipate

that the deal will close and believe the new CTL will be the

preeminent global fiber network solutions company with an

extraordinarily capable management team, including Level 3

CEO Jeff Storey"

 

See page 2

http://longleafpartners.com/sites/default/files/categories/Documents/3Q17-Longleaf-Partners-Quarterly-Summary-Report-All-Funds.pdf

[gfp]

Well there you go, looks like CTL folks talked this over and decided to coordinate a big cluster of insider purchases on December 8th to show they believe their stock is attractive ->

 

https://www.sec.gov/cgi-bin/own-disp?action=getissuer&CIK=0000018926

[Guest longinvestor]

Well there you go, looks like CTL folks talked this over and decided to coordinate a big cluster of insider purchases on December 8th to show they believe their stock is attractive ->

 

https://www.sec.gov/cgi-bin/own-disp?action=getissuer&CIK=0000018926

 

That's the news of two decades. One of the biggest abuses at erstwhile LVLT was egregious handing out of stock and in my recollection, management never bought a single share with their own money. I've lived with that. Great to see a different behavior now.

[Valuehalla]

8 insiders acquired in total 202.500 shares on 8th Dec 2017 (app. 3 M $)

 

The anker investors Mason Hawkins (Longleaf Partners) and Keith Meister (Corvex) also increased their positions during the last few month, as noted here in the blog above.

[Valuehalla]

Net Neutrality, important aspect for CTLs legacy consumer business:

 

https://www.tellusventure.com/blog/end-of-net-neutrality-means-more-corporate-control-of-central-coast-media-and-speech/

 

"The market, at best, is a duopoly collapsing into a monopoly – Comcast and Charter Communications account for 48% of U.S. wireline (and fixed wireless) broadband subscribers, and their share is growing. The next three biggest ISPs – AT&T, Verizon and CenturyLink – muster only a 28% market share, but that’s enough to put more than three-quarters of U.S. broadband subscribers in the hands of just five companies."

[Valuehalla]

GREAT NEWS:

CTL just published SEC 13G filing about Mason Hawkins  (CEO Southeastern Asset Management):

 

http://ofchq.snl.com/cache/391424670.PDF

 

He is holding since last Friday 8th Dec 2017 

 

71.604.936 shares, which is 6,7 % of all outstanding CTL shares. Thats app. 1 B$ today

 

This means he increased his holdings massiv in comparison to the number of CTL shares he received for his LVLT shares because of the acquisition.

 

Holdings by his Funds:

Longleaf Partners Fund - 15,961,137                 

Longleaf Partners Small-Cap Fund - 14,779,941

Longleaf Partners Global Fund - 1,123,152

[Jurgis]

I bought some CTL bonds. Tough to analyze the probabilities with LVLT merger, but assuming the company does not implode and muddles through or even grows, it should be OKish fixed income return. Nothing spectacular.

[LightWhale]

what is the quote on the bonds?

[Jurgis]

There's a bunch of them.

Search Fido or Finra http://finra-markets.morningstar.com/BondCenter/Default.jsp?part=3 (enter "Centurylink" for search)

 

I tried to paste results, but formatting sucks.

[Valuehalla]

Jurgis, why did you choose bonds, not the shares ?

 

The bonds yields are app 4 to 9,5 %.

The dividendyield of the share is app. 13,7 % and its safe and the dividend of 2,16$ p.a. will not be lowered.

[LightWhale]

There's a bunch of them.

Search Fido or Finra http://finra-markets.morningstar.com/BondCenter/Default.jsp?part=3 (enter "Centurylink" for search)

 

I tried to paste results, but formatting sucks.

 

10x

[Valuehalla]

Report about CTL & Corvex as active anker investor:

 

https://seekingalpha.com/article/4131367-centurylink-becoming-industry-leader-need

[gfp]

A few more director purchases at CTL filed today.  Two of the same people from last week and poor Virginia who waited until the price went up a dollar to make her purchase ->

 

https://www.sec.gov/cgi-bin/own-disp?action=getissuer&CIK=0000018926

[Guest notorious546]

What do you guys think about the operational or integration risks with the acquisition? How are you able to get comfort on this front?

 

It seems clear that the market is discounting managements ability to pay/sustain the dividend (2nd highest yielding stock in S&P500) and a rather poor environment on the enterprise market for the next several years

 

[Valuehalla]

Notorious546, for me there is no doubt that they are able and willing to pay the dividend. The revenue doesnt look so bad (analysed & projected here in the corner more early). There are many reports from "experts" out there, who just recognise CTL standalone figures for the whole company, without being aware that already LVLT is inside, providing additional 1,1 B FCF pa. CTL stock was this month a good opportunity for tax-selling after the day of record (24th Nov.). The LVLT management has shown all abilities in the past to make a success out of an aquisition and i am convinced they will do fine with the current situation. Further its great news from 8th December that Mason Hawkins (Southeastern Asset Management)  is now in CTL with 6,7 %;  beside Kieth Meister (Corvex) as active investor, holding 3,4 % of CTL.... so there are two great anker investors. Both of them accompanied LVLT on their way to success during the last decade. I am sure they know what they do.

 

CTL is strong strong buy, a real bargain !

[Valuehalla]

Good bye Net Neutrality:

 

http://transition.fcc.gov/Daily_Releases/Daily_Business/2017/db1214/DOC-348261A1.pdf

 

MAGA MAGA MAGA

 

https://seekingalpha.com/article/4132083-aboard-internet-highway?auth_param=1emn1k:1d37n9d:4f9d8118b4045e223aab8c78f01800b8&uprof=44&dr=1

 

"And this is where the Internet Toll-Road analogy is the best one. CTL, as the 2nd largest owner of fiber optic cable in the country, (those are the said toll roads), now has the ability to charge varied fees to send traffic on its fiber."