CenturyLink Inc. (CTL) has completed its $258 million investment in New Mexico. The company invested $3 million more than the required amount as specified by the New Mexico Public Regulatory Commission (PRC) under the 2007 Second Amended Settlement Agreement.
In 2007, prior to the merger with CenturyLink, Qwest Communications was obligated to make an investment of $255 million to PRC to enhance telecommunication services in New Mexico. CenturyLink kept this commitment post merger.
Per the agreement, CenturyLink was responsible for investing $255 million under five specific areas, one of which was broadband services. The company extended its broadband coverage to 85% of the population, which remains above the set target of 83%. Furthermore, the company also extends its broadband services successfully to 75% of the rural population in New Mexico.
The company was also responsible for addressing PRC’s central office redundancy and diversity by developing fiber routes and secondary back-up to enhance network reliability. The third onus was to replace 150 miles of obsolete cable networks across the country. The fourth and fifth areas were network and advanced telecommunications technology, in which CenturyLink invested in network upgrades and capacity enhancement.
Given the investments and key merger with Qwest –– the third largest telecommunication provider in the U.S.––CenturyLink remains well positioned to mark its presence in new markets like New Mexico. The improving economy and relatively under penetrated telecom market in this region serves as an opportunity for CenturyLink’s expansion and gives it a competitive advantage over other telecom carriers like AT&T Inc. (T), Verizon Communications Inc. (VZ) and Sprint Nextel Corp. (S).
We are currently have a long-term Underperform rating on CenturyLink with a Zacks #5 (Strong Sell) Rank.
