Windstream Corp., the rural phone company that has spent more than $2 billion on acquisitions this year, may look for further purchases to add scale, Chief Executive Officer Jeff Gardner said.
The Little Rock, Arkansas-based company is working to absorb carriers bought this year, such as NuVox Inc., Gardner said today in an interview in New York. Windstream may look at other voice carriers that serve less populated areas and high- speed Internet providers, he said.
Windstream’s sales have declined for the past six quarters as home-phone customers cut their lines in favor of mobile service and voice packages offered by cable-television providers. That has pushed the company to keep looking for ways to combine operations and lower expenses.
“Scale is still important to driving down our cost structure,” Gardner, 49, said. “We’ve been working to grow the business through acquisitions since 2006.”
Windstream rose 3 cents to $10.93 in Nasdaq Stock Market trading at 4 p.m. New York time. The shares have increased 19 percent this year.
Windstream’s acquisitions are part of a plan to expand the company’s product offerings and return Windstream to growth in about three years, Gardner said. The company also won’t rule out selling itself.
“We have a very attractive company,” Gardner said. “If we have an opportunity in that regard, as a seller, we’d have to evaluate that.”
Other Acquisitions
Still, Windstream is more likely a buyer than an acquisition target because of its size, he said. Windstream has agreed to spend at least $2.22 billion on purchases this year, including the $1.1 billion acquisition of Iowa Telecommunications Services Inc. announced last month.
Subscriber losses at similar local phone companies have spurred a wave of consolidation as businesses add size to help them compete. Phone companies have also suffered in the recession, which prompted employers to fire workers and cut their phone lines.
CenturyTel Inc. agreed to buy Embarq Corp. last year, combining two local phone carriers. Wireless providers are adding girth to their networks as well. AT&T Inc., the largest U.S. phone company, completed its acquisition of Centennial Communications Corp. last month. Verizon Wireless became the largest mobile-phone carrier this year when it completed its purchase of Alltel Corp.
Windstream had $290 million in cash at the end of last quarter and sold $400 million of debt in September to help pay for the acquisitions. Windstream has no plans to raise its dividend next year, though it may buy back shares with extra cash in 2010, Gardner said.
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Windstream Sees Potential for Further Consolidation
Source: Bloomberg
Date: 12/10/2009
