Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Is This Company The Next Telecom Acquisition?

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

The wireline sector of the telecom industry has seen increasing consolidation in recent years. Remaining players buy up competitors to take advantage of economies of scale and to counter line losses. In the past year, Frontier Communications (NYSE: FTR  ) picked up a huge chunk of Verizon's (NYSE: VZ  ) wireline business. A couple years ago, CenturyLink (NYSE: CTL  ) picked up Embarq, and it's in the process of buying Qwest (NYSE: Q  ) . And this year Windstream (Nasdaq: WIN  ) closed the deal on Iowa Telecom.

So this space is rife with takeovers. And rumors have abounded for years that one of these players – Frontier, CenturyLink, or Windstream – would take over another. Barring such a big takeover, there are still a number of bolt-on acquisitions that these wireline peers could make to enhance their cash flow – and their dividends – which is the real attraction for investors in this space. And it looks like there will be another target soon.

Earlier this week, NTELOS (Nasdaq: NTLS  ) announced it would spin off its wireline division, which has operations in Virginia, West Virginia, and Pennsylvania. The wireline division generated revenue of $214 million in the year ended September. The spin wouldn't happen until later next year.

The spun-off division could be attractive to Frontier, CenturyLink, or Windstream. But it might fit best within Frontier, which has a heavy presence in West Virginia and some presence in Pennsylvania, or within CenturyLink, with its extensive presence in Virginia and Pennsylvania. Windstream has operations in Pennsylvania. In any case, such an acquisition would be a bolt-on buy for any of these much larger players.

As competition heats up in the telecom space – both in the wireline and wireless spaces – expect further industry consolidation and deal making. Verizon jettisoned its more rural wireline operations to Frontier in a bid to concentrate on more exciting opportunities in its wireless segment. And recent news that super-investor David Einhorn has taken a stake in beleaguered Sprint Nextel (NYSE: S  ) suggests that there may yet be value in some names. Plus, there are a whole host of smaller telecom operators.

Who do you think could be a telecom takeover?

Jim Royal, Ph.D., owns shares of Frontier. Try any of our Foolish newsletter services free for 30 days

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (0) | Recommend This Article (22)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1396454, ~/Articles/ArticleHandler.aspx, 10/20/2016 3:43:31 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,176.25 -26.37 -0.14%
S&P 500 2,140.25 -4.04 -0.19%
NASD 5,242.12 -4.30 -0.08%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/20/2016 3:28 PM
CTL $27.95 Down -0.23 -0.82%
CenturyLink CAPS Rating: **
FTR $4.07 Down -0.03 -0.61%
Frontier Communica… CAPS Rating: ***
NTLS.DL $0.00 Down +0.00 +0.00%
NTELOS Holdings CAPS Rating: *****
Q.DL2 $6.83 Down +0.00 +0.00%
Qwest Communicatio… CAPS Rating: **
S $6.74 Down -0.14 -2.03%
Sprint CAPS Rating: **
VZ $49.02 Down -1.36 -2.70%
Verizon Communicat… CAPS Rating: ****
WIN $8.32 Down -0.06 -0.72%
Windstream CAPS Rating: **