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Windstream的REIT策略:把握Heavy Reading的實際狀態

Windstream's REIT Gambit: A Heavy Reading Reality Check

出版商 Heavy Reading 商品編碼 316360
出版日期 內容資訊 英文 20 Pages
商品交期: 最快1-2個工作天內
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Windstream的REIT策略:把握Heavy Reading的實際狀態 Windstream's REIT Gambit: A Heavy Reading Reality Check
出版日期: 2014年09月30日 內容資訊: 英文 20 Pages
簡介

美IRS(國稅局)5月,對於什麼樣的資產可以進入免稅不動產投資信託(REIT),發表了新指南。Windstream將其被動式接取網路(銅及光纖線路)轉換至REIT,找到了免稅讓現有投資者分拆上市(分割轉讓)的機會。單純賣給第三方這樣的替代方式,會成為資本利得稅的課稅對象。Windstream的這個REIT策略,當初在其策略中找到了預見性與創新性金融及企業界分析師間引起一陣興奮。可是,與此振奮幾乎同樣程度的快速,其他通訊業者對於該策略是否真能獲得利益,抱持懷疑看法的佔多數。

本報告以自家公司傳統的網路資產分拆上市,Windstream這樣的決策為主題,提供影響此決策的要素和在其他的網路業者中此要素的適用可能性分析,該決策是否能給股東帶來利益,以及是否能降低該公司的負債槓桿的疑問的驗證,以及其他的網路業者是否能以同樣的策略受惠相關的分析。

第1章 簡介

第2章 REIT詳細內容

  • REIT分拆上市發表的整體概述
  • 資金的流程
  • REIT及非課稅分拆上市的規則

第3章 分拆上市可帶給股東價值嗎

  • Heavy Reading的FCF利益REIT結構推算

第4章 可透過分拆上市降低槓桿嗎

  • 評價期間關於Windstream的槓桿相關敘述
  • 租賃會計

第5章 其他的通訊業者創造切REIT嗎

  • REIT只有在有納稅時有意義
  • 所有權結構對部分來說是問題
  • 對少數人來說所得及利益清除問題
  • 其他美國電信業者對Windstream的REIT計劃抱持的印象
  • 資本分析師對仿效Windstream者的敘述

第6章 結論

目錄
Product Code: Vol. 14, No. 8

The IRS provided new guidance in May regarding what assets could be put into a tax-free real estate investment trust (REIT) vehicle. Windstream has seen the opportunity to put its passive access network (copper and fiber lines) into a REIT, which it will spin off tax free to existing investors. The alternative of simply selling the assets to a third party would incur capital gains tax.

The Windstream REIT decision generated a burst of excitement from financial and industry analysts who initially saw something visionary and ground breaking in the strategy. Almost as quickly, however, that enthusiasm gave way to skepticism over whether other telecom operators would have anything to gain from following a similar strategic course. Even in the telecom industry's accelerated hype-to-deflation cycle, the REIT strategy soared and fell in nanoseconds.

But dismissing the Windstream REIT strategy without fully understanding it is just as impulsive as labeling it as revolutionary before the planet actually completed one full revolution. A deeper look at Windstream's strategy and the factors that influenced it shows that, while most telecom operators aren't likely candidates to follow Windstream's path, there may be some promise in the REIT gambit for some, either now or at some future point.

The spinoff does create some shareholder value. Windstream estimates the REIT spinoff will boost free cash flow to shareholders by $115 million. However, this is before taking into account an approximate $118 million increase in annual capex to garner political support for the spinoff and compete more effectively with cable companies. Heavy Reading estimates suggest the boost to free cash flow is worth around $1 per share - slightly less than the positive share price reaction on the day Windstream announced the spinoff.

Other telcos are likely to try REIT spinoffs. Windstream has set a precedent with its copper/fiber-line REIT, which we believe other operators may try to follow. However, tax avoidance vehicles such as REITs are unnecessary if a company is sitting on large tax loss carry-forwards, which it can use to offset against current pre-tax profits. The only U.S. wireline operators that appear to pay any material corporation tax are AT&T, CenturyLink, Frontier Communications and Verizon.

The strategic rationale for the spinoff is unclear. Some cynics have suggested that Windstream's REIT spinoff plan is just an elaborate distraction from the fact that the company has had to cut its dividend by 30 percent in order to fund capex that is needed to compete more effectively with cable competitors. Given the rally in the share price on the day that the dividend cut and REIT spinoff was announced the "distraction" seems to have worked.

Windstream's REIT Gambit: A Heavy Reading Reality Check analyzes Windstream's decision to spin off its legacy network assets, focusing on the factors that influenced the decision and the applicability of those factors to other network operators. It explores and answers two key questions about the Windstream move: Does it create value for the company's shareholders, and does it reduce the company's debt leverage The report analyzes the relative financial and ownership positions of other network operators to determine which ones may potentially benefit from spinning off their legacy assets in a REIT.

Sample research data from the report is shown in the excerpts below:

Windstream will lower its net debt position by transferring $2.2 billion of its debts to the REIT and also by receiving a $1.2 billion cash injection from the REIT. After advisor fees (bankers, lawyers, accountants) of $150 million, the company's net financial debt should reduce by $3.2 billion from $8.5 billion to $5.3 billion. However, Windstream will transfer its fiber and copper plant to the REIT and must pay $650 million per year in rent to use those assets.

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Companies covered in this report include: Alaska Communications Inc. (Nasdaq: ALSK); AT&T Inc. (NYSE: T); CenturyLink Inc. (NYSE: CTL); Cincinnati Bell Inc. (NYSE: CBB); Cogent Communications Inc. (Nasdaq: CCOI); Consolidated Communications Inc. (Nasdaq: CNSL); EarthLink Inc. (Nasdaq: ELNK); Fairpoint Communications Inc. (Nasdaq: FRP); Frontier Communications Corp. (Nasdaq: FTR); Hawaiian Telcom Inc. (Nasdaq: HCOM); Level 3 Communications Inc. (NYSE: LVLT); Lumos Networks Corp. (Nasdaq: LMOS); Verizon Communications Inc. (NYSE: VZ); and Windstream Holdings Inc. (Nasdaq: WIN).

Table of Contents

I. Introduction

II. The REIT Details

  • Summary of REIT Spinoff Announcement
  • Money Flows
  • REIT & Tax-Free Spinoff Rules

III. Does the Spinoff Create Value for shareholders

  • Heavy Reading Estimate of FCF Benefit REIT Structure

IV. Does the Spinoff Reduce Leverage

  • What the Rating Agencies Said About Windstream's Leverage
  • Lease Accounting

V. Can Other Telecom Operators Create REITs

  • REITs Only Make Sense if You Pay Tax
  • Ownership Structure Is an Issue for Some
  • Earnings & Profits Purge an Issue for Few
  • What Other U.S. Telcos Think About Windstream's REIT Plan
  • What Equity Analysts Have Written About Others Emulating Windstream

VI. Conclusion

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