Tuesday, July 29, 2014

Windstream Gains Could Help All Telecom

Per the WSJ, thanks to IRS approval, Windstream, a rural telecommunications company, will be able to "spin off some of its telecommunications network assets into an independent, publicly traded real estate investment trust, a move that comes as a wave of U.S. companies look for ways to lower their tax burdens."  That news has lifted the telecom sector resulting in telephone and cable companies, those with a wireline infrastructure, with a potential tax benefit as well.  And whether they also decide to spin off assets into a REIT or not, the stock market expects they will, leading to higher stock prices today. 

How it translates into better service, more investment in the infrastructure, more employment, and other capital investment programs remains to be seen.  Should that be the case, it demonstrates that a heavy tax burden actually reduces the opportunity for new dollars to grow and other benefits to be taken.