Marquita sells WIN 6.07: This could also be on the low side as many (including WIN) believe CSAL is undervalued and that with time the market will come to appreciate its contractual earnings power.

The 20% equity stake is currently valued at $683M. WIN has stated such several times. Well we already know that the company will be selling down its Communications Sales & Leasing, Inc. (NASDAQ: CSAL ) equity stake over the next 12-24 months and using the proceeds to reduce debt. So assuming this deal goes through (there is no guarantee they will find a buyer willing to pay their price), what could Windstream do with all that cash? A $400m-$500m price tag likely represents a pull-forward of 10 years or more of free-cash-flow for this business, assuming a similar yield on FCF to RAX.


Lauri:
When you have the likes of Google, Amazon and Microsoft driving down prices for hosting services, the economics are challenging when you are not at their scale and have little proprietary services to offer.

Courtney:
The fact of the matter is that generic hosting services is a highly competitive business.

Evonne:
Rackspace has generated $116M in free-cash-flow for the last 12 months ($80M if you subtract stock-based compensation) on $1.9B in revenue.

Rosalind:
While it may generate sizable revenue, it likely generates only a small portion of WIN's total free-cash-flow.

Darline:
This is also a heavy cap. ex. business as it needs to build out data centers and servers.

Chantelle:
A major public comp is Rackspace (NYSE: RAX ). Its stock trades at about 7.5x trailing EBITDA.

Leatrice:
The fact that the company is looking to sell this business should tell investors that the economics are not that attractive.

Anisha:
I'm looking for a major debt reduction, stock buybacks and likely a dividend increase as a result of these corporate actions.

Henriette:
If a sale goes through this, combined with the CSAL proceeds, significantly increases the company's financial flexibility.

Yahaira:
Together they are expanding HP cloud and storage solutions to a broader set of customers and prospects.

Windstream Corp. (NASDAQ:WIN)
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