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Sydnee Gatewood
Sydnee Gatewood
Articles (940) 

Longleaf Partners Comments on CenturyLink

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October 09, 2019 | About:

CenturyLink (NYSE:CTL), the fiber and telecom company, was a strong contributor after reporting a relatively flat quarter in line with expectations and maintaining free cash flow guidance. We expect the sales force now being fully integrated after the Level 3 acquisition and faster pace of new installations to drive accelerated growth in the key Enterprise business in the coming quarters. CEO Jeff Storey and CFO Neel Dev continue to make progress in improving the cost structure, with a further $200-300 million per year of additional cost savings identified and a focus on increasing cash flow. CenturyLink’s management has intentionally run off non-core, unprofitable businesses, like low-speed consumer internet and voice, while intelligently investing to expand the network’s Enterprise fiber coverage and growing high-margin revenues over the long term. As CenturyLink’s Enterprise growth inflects to outweigh the legacy declines later this year and next, we expect both the company’s top line and consolidated EBITDA per share to grow. The company trades at a roughly 65% discount to our appraisal today and a multiple of 4-4.5x free-cash flow. We are engaged with management to explore additional options to close the price-value gap, as there continues to be a healthy amount of M&A in the industry at multiples above where we appraise CenturyLink’s parts.

From Longleaf Partners' third-quarter 2019 shareholder commentary.

About the author:

Sydnee Gatewood
I am the editorial director at GuruFocus. I have a BA in journalism and a MA in mass communications from Texas Tech University. I have lived in Texas most of my life, but also have roots in New Mexico and Colorado. Follow me on Twitter! @gurusydneerg

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