Telco Stocks Fall After Windsteam Eliminates Dividend
Shares of some telcos fell after Windstream eliminated a dividend. Windstream said it instead will buy back up to $90 million of stock. "This is the right path,” said CEO Tony Thomas Thursday. Later that day, the company's stock fell,…
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as did those of CenturyLink and Frontier Communications. CenturyLink and Frontier declined to comment. Rural LECs were likely to take "it on the chin today in light of the ... dividend cut," Wells Fargo analyst Jennifer Fritzsche emailed investors before the open of regular U.S. markets; she declined further comment. Windstream can use the savings "to de-lever, expedite its capital investment in building out fiber, and buy back shares," she wrote in another note. Windstream is "very confident about the track we are on," a spokesman emailed us. "The stock volatility is not unexpected given the change in our capital allocation strategy. Our equity is undervalued in the market, and we believe eliminating the dividend and implementing a meaningful share repurchase program is the best way to create long-term value for our shareholders." Windstream ended Thursday down 36 percent at $2.38, CenturyLink closed down 5.5 percent to $22.44 and Frontier slid 15 percent to $14.54.