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My Take On CenturyLink, Its Free Cash Flow And Dividend

There’s been a lot of agonizing over CenturyLink’s (CTL) dividend. Will it be cut or is it sustainable? The market has its doubts yielding about 12% at the time of this writing. Frontier Communications (FTR) and Windstream (WIN) received the same treatment over time which proved well deserved. Comparing CenturyLink to these companies is an apple to oranges comparison. A comparison may have been acceptable before CenturyLink acquired Level 3 Communications given their legacy consumer business. The acquisition created an enterprise focused company representing 74% of revenues. CenturyLink acquired a state of the art global network and operates in over 60 countries with more than 100,000 on-net buildings, expanding opportunities.

Cementing the change in strategy from Level 3’s playbook is the fact Level 3 management will fill the top positions. Jeff Storey will be CEO in May and Sunit Patel is already CFO. In addition to the two top spots other Level 3 managers in leadership positions are:

  • Matt Gutierrez

  • Shaun Andrews

  • Lisa Miller

  • Edward Morche

  • Laurinda Pang

Makes you wonder who really bought who. Jeff Storey (Level 3 CEO since 2013) and Sunit Patel have a solid track record of growing FCF (free cash flow); a requirement for dividend sustainability. Both have a track record of successfully integrating a large acquisition.

(Seeking Alpha has exclusive rights to this articles, i.e., the full article cannot be reprinted elsewhere)

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