CenturyLink investors got the shock of their investment lives last week after company executives announced the phone company was slashing its dividend by 26 percent from 72.5 cents to 54 cents per share. The stock immediately tanked, tumbling the most in more than three decades, according to Bloomberg News.

The stock price crash wiped out about $6 billion in market value after the dividend cut was announced and stock analysts lambasted executives for the decision.

But CenturyLink’s move to stop paying out large sums to investors does not mean the company is going to spend the money on network and service upgrades. Instead, CenturyLink executives plan to spend $2 billion in stock purchase buybacks over the next two years.

“This is one of the most unusual capital allocation decisions I have ever seen,”  Todd Rethemeier, an analyst with Hudson Square Research in New York told Bloomberg.

CenturyLink, like Frontier Communications and Windstream, have all been popular “investment-grade” stocks for investors that rely on dividend payouts. Many investors explore various platforms for trading these stocks, often seeking resources that provide in-depth analyses, such as a Kraken review, to make informed decisions. All three phone companies have paid extremely high dividends to attract shareholder investment, but the ongoing decline in revenue from landline customers disconnecting service has made high dividend payouts financially untenable. CenturyLink has lost six percent of its landline customers in the 12 months ending last September, a decline of 857,000 lines. In the last two years, the dividend payout has cost CenturyLink 50-55 percent of its free cash flow. That is unsustainable at a time the company is losing upwards of $25 million in operating revenue every quarter.

From: Seeking Alpha

CenturyLink executives told shareholders in the company’s latest quarterly conference call that much of CenturyLink’s investment will continue to build fiber links to serve highly profitable cell towers. The company also plans to further expand its fiber-to-the-neighborhood service Prism, which works similarly to AT&T’s U-verse. Phoenix, Arizona is the company’s next major target for rollout, with the service already soft-launched in certain neighborhoods. But do not expect CenturyLink to begin a spending spree to expand Prism rapidly into other communities, even if it means losing more landline customers.

The Minneapolis Star-Tribune reports CenturyLink, the city’s primary phone company, is now in a race against time in a country where more than a third of Americans rely on cellphones — a service CenturyLink does not provide. In response, CenturyLink has relied on its multi-platform Prism service, which can provide phone, broadband, and cable-TV in its bid to stay relevant and help improve earnings growth. The company also sees corporate customers as a major income source, and has expanded into the business of cloud computing with its acquisition of Savvis.

But the company has a more immediate potential challenge. The Communications Workers of America (CWA), the union representing as many as 13,000 CenturyLink employees, has authorized its executive board to set a strike date. The company’s labor contract expired in October and bargaining has yet to achieve a renewal. Workers are complaining about significant benefits cuts, especially to health care plans.

More than 20 cable systems across Kansas will be terminating television and broadband service after a private equity firm, working with former Bresnan Cable executives, deemed them unprofitable and not worth upgrading.

Residents of Conway Springs (pop. 1,250), Chetopa (1,125), Sharon (158), and Harper (1,473) are among those who will find their cable and broadband service discontinued in the coming weeks. Abandoned cable subscribers are being told to buy satellite dishes to continue watching television. No immediate broadband solution was available.

Allegiance Communications, which provides cable TV, broadband Internet, and VOIP telephony services to rural and mid-size markets in Arkansas, Kansas, Missouri, Oklahoma, and Texas was acquired last month by former executives at Bresnan Communications, itself bought out by Cablevision Industries. The deal was largely financed by BBH Capital Partners, a New York City-based private equity firm.

The purchase by BCI Broadband orphaned nearly two dozen cable systems that Allegiance owned and operated, but were excluded from the sale. Subscribers are being notified they are about to be switched off permanently in letters signed by Allegiance executives.

Several former Bresnan Cable executives are behind BCI Broadband.

The service will leave rural Kansans without broadband service, cable television, or an alternative to AT&T and other independent phone companies operating in the state.

“This was not an easy decision for us, nor is it one that we came to hastily. The costs of doing business in Conway Springs can no longer be profitable,” Allegiance wrote in its letter, according to KSNW-TV.

Local officials in affected communities are rushing to find an alternative, appealing to providers like Southern Kansas Telephone to see if they can pick up where Allegiance left off, but the phone company has yet to respond.

Allegiance claims the outdated cable systems served few subscribers and the new owners were not interested in investing funds to upgrade them.

BCI Broadband is a new company run by former executives forced out of Bresnan Communications when the company was sold to Cablevision. BCI Broadband claims it wants to invest in system upgrades to improve service to remaining subscribers.

“Historically when we have purchased cable systems and invested in upgrading to the latest technology in markets like Shawnee, that has inevitably led to more customers and the need for more staff,” said Shawn Beqaj, vice president of public and government affairs for BCI Broadband. Beqaj was the former vice president of public affairs at Bresnan.

There has been an accelerating trend of industry consolidation among rural cable operators, particularly by private equity firms that are interested in the stable earnings cable operators usually generate.

GTCR, through its portfolio company Rural Broadband Investments LLC , separately announced its plans to acquire NewWave Communications Co., in what it hopes is just the first of a series of acquisitions. NewWave’s purchase was financed by debt capital from SunTrust Robinson Humphrey, Inc., and Goldman Sachs Bank USA.

[flv width=”480″ height=”290″]http://www.phillipdampier.com/video/KSNW Wichita Small towns losing cable service 2-7-13.mp4[/flv]

KSNW-TV reports more than 20 Kansas communities will lose television and broadband service when Allegiance Communications switches off the cable systems. (2 minutes)

Press “1” to talk to James Dolan, CEO of Cablevision.

Cablevision has filed a lawsuit against the Communications Workers of America District 1 and its Local 1109, which represents area workers, in Nassau County Supreme Court.

The cable operator is accusing the union of launching harassing robocalls which have given customers the chance to pester CEO and president James Dolan.

At least 20,000 robocalls were made to Cablevision subscribers in three days, from Jan. 31 – Feb. 2 which the cable company alleges were designed to cost the company money and its reputation.

If customers pressed “1” during the call, they were automatically forwarded to a Cablevision call center to complain about recent rate increases and recent job losses at the company. On Feb. 3, Cablevision alleges the robocall campaign was adjusted. Now if customers press “1” during the call, they are directly connected to the phone sitting on Dolan’s desk. In just two days, Cablevision alleges Dolan’s line received 1,193 calls.

The following day, the union was also accused of sharing Dolan’s direct number on social media websites.

“The union will no doubt claim that their telephone harassment scheme is designed to allow customers to communicate substantive messages to the CEO, but such an argument cannot sustain the slightest scrutiny,” reads the complaint. “The unions knows full well that no Fortune 500 CEO can possibly handle a concentrated barrage of one-on-one phone calls with subscribers and others, and that companies like Cablevision have designated and publicly known call centers established precisely to handle such calls in an orderly, responsive manner – including mechanisms for escalating certain such calls to the CEO, if necessary.”

The CWA and Cablevision have fought over an effort to unionize cable company workers in Brooklyn, N.Y.

A year ago, Cablevision workers in Brooklyn voted to form a union, but Cablevision/Optimum management has allegedly stonewalled the unionization effort.

On Jan. 30, about two dozen workers sought to speak with Cablevision management under the company’s “open door” policy, specifically about the lack of progress in completing a contract. Cablevision terminated the 22 employees on the spot, deeming them “permanently replaced.”

Cablevision’s suit requests court costs and an injunction ordering the union not to harass it, aid or abet harassment, or falsely and deceptively display any Cablevision phone number on robocalls.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/CWA Fired Cablevision Workers 2-2013.flv[/flv]

 The Communications Workers of America produced this video highlighting what they consider the unfair termination of 22 workers after seeking an “open door” meeting with Cablevision management.  (2 minutes)

Verizon last week surprised 20 Philadelphia families scheduled for installation of its fiber optic service FiOS on Valentine’s Day with flowers, chocolates and Verizon-labeled canvas bags.

The surprise visits from “FiOS Cupids” were part of a marketing and publicity campaign to highlight FiOS in parts of northeastern and northwestern Philadelphia. Verizon has been slowly rolling out its network in the city, now reaching a potential 1.1 million households.

Although Verizon has suspended expanding its fiber optic network into new communities, it is still working to complete network builds already committed before the project was suspended.

Verizon has until 2016 to complete its FiOS network in Philadelphia.

$1.99 each per month… every month.

Comcast customers in parts of Minnesota are receiving notification their cable lineup is about to switch to “all-digital,” requiring most to rent Comcast-supplied digital cable set-top boxes that will add at least $1.99 per box, per month to customers’ bills.

Residents in Eagan are so upset, a special meeting has been scheduled tonight by the Eagan City Council to discuss the burgeoning cable fees from the largest cable provider in the state.

“What we’ve decided to do is try to gather more information on behalf of our residents,” Eagan communications director Tom Garrison told the Eagan Patch. “I think people are certainly hearing about it. They’ve got questions, they’ve got mailings, and we hope to get them good and useful information they can act on.”

Comcast is in the process of reclaiming space on its cable systems by switching analog television channels to digital service, which will free up considerable bandwidth for other uses. But customers are inconvenienced if they do not already have Comcast set-top boxes.

Comcast has notified customers they can have a Digital Transport Adapter (DTA) sent to them for $1.99 per month, per adapter. The device makes digital signals available in analog so customers can keep watching. But the equipment no longer is provided for free. Customers will have to either install a DTA, a traditional set-top box, or a CableCARD on every television in the home after the conversion is complete.

Although the city will meet with interested residents, local government officials have very little say over how Comcast chooses to conduct business and cannot force the company to change its plans.