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CenturyLink to Boost Promotion

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Communications service provider CenturyLink Inc. (CTL) announced the launch of a fresh advertising campaign. The promotion will be carried out across the U.S. and shed light on the company’s advanced network, managed hosting and cloud capabilities.

The publicity will be accomplished via television, print and online ads and will focus on highlighting CenturyLink’s commitment to rendering global broadband, cloud infrastructure and varied IT solutions. Although the ads primarily emphasizes on the business offerings of the company, management stated that CenturyLink will continue to deliver broadband, entertainment and voice services to residential customers across the nation.

Monroe, LA-based CenturyLink believes that the new advertising strategy will draw attention to its capability to tender high scale and integrated end-to-end solutions to various businesses. This will help the third largest telecommunications firm in the U.S. to come closer to other top industry players – AT&T Inc. (T) and Verizon Communications Inc. (VZ).

However, we believe that the expenses associated with these promotional activities will increase the overall operating costs of the company, leading to margin pressure and lower profitability. Further, the company also faces headwinds such as deteriorating legacy voice and access revenues due to the loss of customers, intense competition from other low cost telecom operators like LEAP Wireless International Inc. (LEAP) and regulatory issues.

Despite these, we appreciate CenturyLink’s progress in key areas like broadband expansion, completing fiber builds, cloud computing and Prism TV. The company is also banking heavily on lucrative partnerships and expanding products to new territories to gather market shares. Additionally, synergies arising from Qwest and Savvis acquisitions are expected to support revenue growth.

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