Windstream 2014 Annual Report Download - page 80

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Our consumer business remains under pressure due to competition from wireless carriers, cable television companies and other
companies using emerging technologies. For the year ended December 31, 2014, our consumer voice lines decreased by 107,700
lines, or 6.3 percent, as compared to the prior year. In response to this competitive pressure, we are focused on stabilizing our
consumer business through expansion and upgrade of our broadband network and service offerings.
We believe that we are well positioned to grow our business by investing in our network, offering advanced products and solutions,
targeting enterprise business customers and controlling costs through our disciplined approach to capital and expense management.
In leveraging these strengths, we expect to continue to create significant value for both our customers and our shareholders.
Dividend Policy - Pre Spin-off
Our current dividend practice is to pay a quarterly dividend of $0.25 per common share or $1 per common share on an annual
basis. As previously discussed, in connection with the proposed spin-off, we expect to lower our annual dividend. We anticipate
that the spin-off will occur in the second quarter of 2015. We plan to maintain our current dividend practice through the close of
the transaction. If the closing date of the spin-off is not on the record date of Windstream’s normal quarterly dividend, we intend
to pay a pro rata dividend to our shareholders based on the number of days elapsed in the quarter.
Dividend Policy - Post Spin-off
Following the distribution of CS&L's common shares to shareholders, Windstream intends to complete a 1-for-6 reverse stock
split. Reverse stock splits generally do not impact the value of an investment or the actual dividend payment received as the
shareholder's pro rata ownership of the company remains the same and the dividend is adjusted up accordingly. Following the
reverse stock split, Windstream expects to pay an annual dividend of $.60 per share, paid on a quarterly basis.
To illustrate the effects of the spin-off and the 1-for-6 reverse stock split, if a Windstream shareholder currently owns 1,000 shares,
the shareholder will continue to own 1,000 shares of Windstream after the spin-off and will receive approximately 0.20 shares of
CS&L common stock for each Windstream share owned, or 200 CS&L common shares. Following the reverse stock split, the
Windstream shareholder in this example would own 166 Windstream common shares and 200 CS&L common shares, as the reverse
stock split does not affect the number of CS&L common shares owned. Windstream's annual dividend adjusted for the reverse
stock split will be $.60 per share, or $100 annually. CS&L expects to pay an annual dividend of $2.40 per share, or $480 annually.
Our dividend practice can be changed at any time at the discretion of our board of directors. Accordingly, we cannot assure you
we will continue paying dividends at the current rate or the post-spin adjusted rate. See Item 1A, “Risk Factors,” for more information
concerning our dividend practice.
Strategic Acquisitions
During 2011 and 2010, we completed a series of acquisitions designed to accelerate our transformation from a traditional telephone
company to an enterprise communications and service provider. First in early 2010, we acquired NuVox Inc. (“NuVox”), a leading
regional business service provider based in Greenville, South Carolina. Through this acquisition, we added a broad portfolio of
Internet protocol (“IP”) based services and strengthened our sales force to better serve business customers. Two more acquisitions
quickly followed. On December 1, 2010, we purchased Hosted Solutions Acquisition, LLC (“Hosted Solutions”) of Raleigh, N.C.,
a data center operator in the eastern United States. This acquisition provided us with the necessary infrastructure to offer many
advanced data services, such as cloud computing, managed hosting and managed services, on a wide scale. We also gained five
state-of-the-art data centers and approximately 600 business customers. On December 2, 2010, we completed the acquisition of
two wholly-owned subsidiaries of Q-Comm Corporation (“Q-Comm”). Kentucky Data Link, (“KDL”), a regional transport services
provider with 30,000 miles of fiber, and Norlight, a business services provider with approximately 5,500 customers. This transaction
significantly expanded our fiber network, allowing us to reach more business customers and to compete for more wireless backhaul
contracts. KDL’s fiber transport network also provided opportunities for substantial operating synergies by allowing us to carry
more traffic on our own network rather than paying other carriers for this service.
Finally, on November 30, 2011, we acquired PAETEC Holding Corp. (“PAETEC”). In this transaction, we added an attractive
base of medium to large-sized business customers, approximately 36,700 fiber route miles, seven data centers, and an experienced
sales force focused on serving enterprise-level customers.