CenturyTel to work out job cuts in next month
* CenturyTel to work out job cuts in 4-5 weeks
* Sees high pct of savings from tech systems, network
* CenturyTel shares up almost 1 pct
By Sinead Carew
NEW YORK, July 1 (Reuters) - Rural operator CenturyTel (CTL.N) closed its purchase of Embarq Corp on Wednesday and the head of the new company said it would take a month or so to figure out how many jobs it needs to cut meet savings targets.
CenturyTel, which is changing its brand to CenturyLink, expects a large amount of the $400 million in annual savings targeted by 2011 to come from combining billing systems and reducing data transport costs.
President and Chief Executive Glen F. Post III, said jobs would be cut from the company's combined work force of 20,000, but he expects it to take another four to five weeks to finalize the company structure and job locations.
"There's some inevitable job overlap, operational redundancies. We realize there'll be some required reductions," he said in a telephone interview. "We're still working on it."
CenturyTel, like other landline telephone companies is looking for growth through acquisitions as it, like other landline companies faces a stream of disconnections of home phones from consumers looking to save money.
It announced its plan in late October to buy Embarq for $5.8 billion in stock and to take on about $5.8 billion of Embarq's debt. Since then another rural provider, Frontier Communications (FTR.N), announced plans to buy wired phone lines from Verizon Communications (VZ.N). [ID:nN13378562]
CenturyLink will serve about 7.5 million customers in 33 States, including 2.1 million broadband and 440,000 video subscribers, according to CenturyTel, which plans to a full brand conversion later this year.
Based on the operating results of the two companies for the 12 months ended Dec. 31, 2008, CenturyTel would have had combined revenue of more than $8 billion, combined operating cash flow of over $4.2 billion and combined free cash flow of approximately $1.9 billion.
It expects the deal to increase free cash flow per share in 2010, the first full year after the close but Post did not give specific financial targets.
The company also said it expects to continue its current annual dividend of $2.80 per share.
As well as returning cash to shareholders, Post said the company would also invest in expanding services such as broadband, video and stand-alone data services without a requirement to also subscribe to a phone service.
"Our future is really in broadband and data services," he said. "We'll be working on bundling of services to provide more value."
Under the terms of the deal Embarq stockholders were to receive 1.37 CenturyTel shares for each Embarq share they owned as of the closing.
It said that customer-facing operations and communications will continue to use the CenturyTel and Embarq brands until the full brand conversion and the company cannot formally change its name to CenturyLink until it gains shareholder approval, which it expects to ask for in May 2010.
The company's stock continues to trade on the New York Stock Exchange under the ticker symbol "CTL" (CTL.N). Its shares were up 25 cents at $30.95 shortly before the close.
The corporate headquarters of the company will be in Monroe, Louisiana, but it will keep a significant presence in the Overland Park, Kansas, Embarq's former headquarters.
(Reporting by Sinead Carew; Editing by Richard Chang)
