AT&T owes $181 Billion – more than most nations – making it the most indebted company in the world.
Verizon total debt is $120B.
Comcast hit $100B.
Windstream debt is $6B – but market cap is $144 Million. And they just lost a huge lawsuit that
Uniti has $7B from Windstream and acquisitions.
This is like the 1980s – every telco is over-leveraged.
Revenue is not going up for telcos. ARPU is not increasing. How do they generate enough cash flow to pay it off? Mostly they just refinance the debt and kick the can down the road.
The M&A is not adding up. Just looks at AT&T or Birch.
Birch had 24 acquisitions before the reverse merger with Fusion in 2017. They bought Cbeyond in 2014 which was doing about $500M in revenue. They bought Primus in Canada and the US (US is now called Lingo and is on an M&A tear under the Birch Holdings umbrella, creating another ugly mess.) The combined company “expects annual revenue of $575 million” of which $122M is Fusion (+Apptix). So Birch had $453M in revenue after 24 acquisitions and $458M in debt. Another excellent example of bigger is better (<Sarcasm/>).
I look at all of this and think we have been played. None of these executives know what the heck they are doing except playing with the stock price for their own personal gains. None of it is about a Vision or a Strategic Plan.
On a side note about the Windstream court case (HERE and THERE), whereby Aurelius Capital Management and U.S. Bank National Association sued Windstream for breaking the covenants of their bonds with the Uniti REIT deal. As it turns out the court ruled they did break it and defaulted on the bond and have to pay it back with interest – about $330M. WIND has less than $99M in free cash. Analysts are predicting bankruptcy but what assets are left under the Windstream Holdings and Windstream Services umbrellas? Not much. Central offices, copper, etc. The only real asset is the Windstream Holdings’ exclusive leaseback deal with Uniti. It won’t be fun to watch this play out.
All the news about Uniti is due to the stat that 64% of its revenue comes from WIND. And that this revenue is high margin.