CenturyLink could convert legacy, network businesses to REIT this year, say analysts

With Windstream having recently completed the spinoff of its wireline assets into its publicly-traded real estate investment trust (REIT), analysts are now speculating that CenturyLink (NYSE: CTL) is next in line to take a similar move.

Macquarie Research wrote in a research note that CenturyLink likely is looking closely at how Windstream's new REIT, called Communications Sales and Leasing (CS&L), performs. "We continue to think that CTL is watching WIN closely and could convert its legacy or network business to a REIT later this year," the analysts wrote. "We value CTL on a breakup at $44.65 and in the high $40s for a breakup and REIT conversion."

Stewart Ewing, CFO of CenturyLink, told investors in December during the UBS 42nd Annual Global Media and Communications Conference that it would consider the REIT idea while keeping an eye on how Windstream's CS&L performed.

"We're very pleased with the assets we have, but we will continue to observe what happens with Windstream and their REIT process, how their REIT trades after they basically split the company and make a decision down the road," Ewing said at the time. "We're always looking at ways to create value for shareholders, but that does not prevent us from continuing to basically look at other structures should they be more advantageous from a shareholder perspective."

For its own part, Windstream recently completed the spinoff of parts of its wireline network assets into CS&L, a move that it says will reduce debt and provide capital to make new network investments. With the spinoff now complete, CS&L is an independent, publicly traded company that began trading on the Nasdaq stock exchange under the symbol "CSAL." 

CenturyLink did not respond to FierceTelecom for a response to the Macquarie Research report.

For more:
- see this report (.pdf)

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