CenturyLink Inc. CTL recently inked a definitive agreement to acquire privately held firm Steamroot Inc. for an undisclosed amount. The transaction is likely to strengthen its position as a leading provider in content delivery network and reinforces its commitment toward edge computing services.
Paris-based Steamroot is a startup firm that offers state-of-the-art video delivery solutions across connected consumer devices such as smart phones, tablets, computers, set-top consoles and smart TVs. Its disruptive content delivery model leverages a secure and private mesh delivery system to provide premium content to millions of customers without compromising on quality. This edge-based delivery architecture facilitates users to enjoy high-quality over-the-top video streaming content that would not have been possible through conventional content delivery methods.
The acquisition will enable CenturyLink to enrich its video content offerings in bandwidth constrained areas by utilizing edge computing and data driven approach of Steamroot. The buyout is expected to help the company transform its business operations through product evolution and digitizing of customer interactions, thereby combating stiff market competition. On the other hand, the transaction will enable Steamroot to gain additional mileage from a dedicated customer base of CenturyLink and accelerate its innovations for improved viewing experience.
CenturyLink is actively investing in fiber-to-the-tower (FTTH) facilities and has expanded its fiber-based backhaul services to gain traction in the over-the-top video streaming content. The company has significantly increased broadband speed with continuous investments in network development. Its IPTV rollout is likely to bring further high-speed Gigabit broadband to new markets through the FTTH network infrastructure.
In addition, CenturyLink is focused on bringing improved operational efficiencies through a number of methods, including network simplification and rationalization. This should help the company improve its end-to-end provisioning time and drive standardization. CenturyLink also aims to establish itself as a global leader in cloud infrastructure and hosted IT solutions arena designed for enterprise customers. The company’s strong network capabilities, integrated hosting and network solutions are likely to promote growth in the cloud business. Notably, the company views its managed and cloud services as a key differentiator from other players in the market.
The stock has declined 45.1% over the past year, while the industry has rallied 7.8%. It remains to be seen if inorganic growth initiatives can propel CenturyLink's shares.
CenturyLink currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry are T-Mobile US, Inc. TMUS, Telenav, Inc. TNAV and Viasat Inc. VSAT, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
T-Mobile has long-term growth expectations of 12.4%. It beat earnings estimates in each of the trailing four quarters, the average being 17.9%.
Telenav beat earnings estimates twice in the trailing four quarters, the average being 12%.
Viasat beat earnings estimates in each of the trailing four quarters, the average positive surprise being 230.6%.
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