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



Windstream and Frontier Cash in On Netflix-Verizon Spat

Windstream Holdings (NASDAQ: WIN  ) and Frontier Communications (NASDAQ: FTR  ) rarely make headlines for their technological advances. They are telco providers that have emphasized underserved rural markets as a way to avoid locking horns with the industry's giants. This naturally isn't a hotbed of growth. Analysts see Windstream and Frontier posting modest declines in revenue through the next couple of years. 

However, Windstream and Frontier became the unlikely beneficiaries of Netflix's (NASDAQ: NFLX  ) ongoing dispute with Verizon (NYSE: VZ  ) . The leading premium streaming video provider has been calling out Internet service companies for their transmission speeds on Netflix content. It's been putting out monthly charts spelling out the speeds that its streams are receiving across the country's broadband providers. 

Netflix and Verizon seemed to have made nice several weeks ago on a deal that would speed up transmissions, but that apparently didn't help matters much last month. Netflix's latest blog post shows Verizon's DSL service is last among the 16 providers singled out by Netflix. Verizon's speedier FiOS offering slipped two slots to 10 on the list. The two companies that passed Verizon were Windstream and Frontier. 

Technically speaking, all three clocked in at a rather unimpressive 1.9 megabits per second. However, Verizon FiOS dipped since April while Windstream and Frontier improved their rates. At the end of the day Windstream and Frontier still have bragging rights. When it comes to Netflix users their modest DSL platforms are not only faster than Verizon DSL, but they are just as good as Verizon FiOS.

Source: Netflix.

There's naturally more to this story than just the bragging rights. Windstream and Frontier are appealing to income investors given the generous payouts that they're currently dishing out. Frontier's yielding a healthy 7% on its stock, and Windstream is clocking in at a whopping 10.3%. Those yields -- particularly Windstream's disbursements -- won't be sustainable for long if earnings follow revenue lower.

Both telcos are trying. They're pushing online and business services to offset the evolutionary decline in landlines. It wouldn't hurt if their broadband platforms grew a little faster, and here is where they can use this Netflix data as a springboard to retain their subscribers and possibly attract new ones. Netflix is a pretty big deal in rural markets where movie theaters and now even Redbox kiosks are hard to come by. If Netflix's read on the data is correct about Windstream and Frontier holding up as well as both of Verizon's online offerings they should be shouting it from the rooftops.

Top dividend stocks for the next decade
The smartest investors know that dividend stocks simply crush their non-dividend paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.


Read/Post Comments (0) | Recommend This Article (9)

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.

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: 2992544, ~/Articles/ArticleHandler.aspx, 8/30/2015 4:09:14 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...

Rick Munarriz

Rick has been writing for Motley Fool since 1995 where he's a Consumer and Tech Stocks Specialist. Yes, that's a long time. He's been an analyst for Motley Fool Rule Breakers and a portfolio lead analyst for Motley Fool Supernova since each newsletter service's inception. He earned his BBA and MBA from the University of Miami, and he now lives a block from his alma mater.

Today's Market

updated 1 day ago Sponsored by:
DOW 16,643.01 -11.76 -0.07%
S&P 500 1,988.87 1.21 0.06%
NASD 4,828.33 15.62 0.32%

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

8/28/2015 3:59 PM
FTR $5.08 Up +0.15 +3.04%
Frontier Communica… CAPS Rating: ***
NFLX $117.63 Down -0.03 -0.03%
Netflix CAPS Rating: ***
VZ $46.07 Down -0.12 -0.26%
Verizon Communicat… CAPS Rating: ****
WIN $7.03 Up +0.24 +3.53%
Windstream Corp CAPS Rating: ***