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Project Excel: Windstream’s Expansion in High-Speed Internet Space

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Funding from sale of data centers

In the previous part of this series, we learned about the completion of the data center transaction between wireline telecom company Windstream (WIN) and TierPoint. According to Windstream’s press release on December 18, 2015, “This transaction enables Windstream to focus capital on our core telecom offerings and pay down debt.”

According to the company, the amount from this sale is intended to help it make capital investments of ~$250 million in the Project Excel initiative. Plus, around $300 million of these sale proceeds will be utilized to cut down borrowings. This data center deal is a $575 million cash transaction.

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Windstream’s Project Excel

As we can see in the above chart, the Project Excel program is expected to boost Windstream’s Internet speeds significantly in the consumer and small business ILEC (incumbent local exchange carrier) markets by the end of 2016.

According to the company, after the initiative is complete, a significant 88% of its coverage would have access to Internet speeds of at least 10 Mbps (megabits per second). Additionally, in the 25 Mbps and 50 Mbps slots, the coverage would be 54% and 30%, respectively.

Instead of taking direct exposures to individual stocks in the US wireline industry, you may consider taking a diversified exposure to this space by investing in the Technology Select Sector SPDR ETF (XLK). XLK held a total of ~10.2% in AT&T (T), Verizon (VZ), CenturyLink (CTL), Frontier Communications (FTR), and Level 3 Communications (LVLT) at the end of October 2015.

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