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Lumen Technologies Inc Ordinary Shares LUMN

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Morningstar’s Analysis

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Economic Moat




CenturyLink’s Good Results Have Underlying Blemishes, but Depressed Stock Is Disjointed From Outlook

Matthew Dolgin, CFA Equity Analyst

Analyst Note

| Matthew Dolgin, CFA |

CenturyLink beat FactSet consensus second-quarter revenue and EPS estimates, but margins were disappointing, and we’re skeptical about the sustainability of some of the drivers behind the revenue outperformance. Nonetheless, we think recent market prices imply a low bar for CenturyLink, and the results demonstrated that its business is not severely hampered by the new environment that COVID-19 has induced. We maintain our $18 fair value estimate, and even with our view that revenue is in perpetual decline, CenturyLink looks significantly undervalued.

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Company Profile

Business Description

With 450,000 route miles of fiber, including over 35,000 route miles of subsea fiber connecting Europe, Asia, and Latin America, Lumen Technologies is one of the United States’ largest telecommunications carriers serving global enterprises. The merger further shifted the company’s operations toward businesses (now 75% of revenue) and away from its legacy consumer business. Lumen offers businesses a full menu of communications services, providing colocation and data center services, data transportation, and end-user phone and Internet service. On the consumer side, Lumen provides broadband and phone service across 37 states, where it has nearly 5 million broadband customers.

100 CenturyLink Drive
Monroe, LA, 71203
T +1 318 388-9000
Sector Communication Services
Industry Telecom Services
Most Recent Earnings Jun 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type High Yield
Employees 42,500