BWNG - Here's a new's story that connects the FCC news to BWNG movement:
NEW YORK (Dow Jones)--Broadwing Corp. (BWNG) shares rose more than 17% Wednesday as it appears the company will keep the discounted rate it leases the Baby Bells' networks to sell its service, despite a ruling that would otherwise eliminate most of those discounts. The Federal Communications Commission earlier approved new rules that would scale back the requirement of Bell phone companies such as Verizon Communications (VZ) to lease space on their networks at steep discounts. This is the agency's fourth attempt to establish rules on when Bell companies must lease elements of their networks to competitive carriers, known as CLECs. The previous three attempts were struck down by courts. The FCC voted 3-to-2 on the matter.
The FCC also imposed an impairment test that would maintain the discounts in more than 99% of the wirecenters that cater to small and mid-sized businesses. Only the most dense areas would lose the discounts, said Mark Wigfield, spokesman for the
FCC's wireline competition bureau.
The ruling removes a concern that hung over Broadwing, relieving those who feared that the company would lose the discounted rates, said Needham & Co. analyst Vik Grover.
In addition, Broadwing is undervalued, and makes an attractive acquisition target, Grover said. The merger between Sprint Corp.(FON) and Nextel Communications Inc. (NXTL) has spurred consolidation talks in the sector. Part of the stock rise may be related to takeover speculation. A spokesman for Broadwing wasn't immediately available to comment on what was moving the stock.
From a fundamental view, the company is showing improvement, and Grover expects it to be cash flow positive next year.
Grover doesn't own Broadwing, and his firm doesn't have an investment banking relationship. Broadwing recently traded at $8.41, up $1.41, or 20.1%, on volume of 4.6 million shares. Average daily volume is 1.2 million shares.
-By Roger Cheng, Dow Jones Newswires; 201-938-5393; roger.cheng@dowjones.com