Wachovia sees CenturyTel tapping markets, possibly with a convert

By Ronda Fears

Nashville, Tenn., July 26 - CenturyTel Inc. will need $150 million to $350 million in capital this year and may tap the markets, possibly with a convert, Wachovia Securities, Inc. convertible analysts Jeanine Oburchay and Brian Park said in a report Friday.

"Despite a new $800 million facility, the company will still face cash needs this year of $150 million to $350 million," according to Oburchay and Park.

"Management thinks it can access the banks again, but we believe the company may come back to the market with some type of equity or convert."

In April CenturyTel sold $500 million of 6.875% mandatory convertibles, with proceeds earmarked toward its $2.16 billion purchase of wireline assets from Verizon.

CenturyTel, a Monroe, La.-based rural telephone company, reported Thursday that second quarter earnings gained on strong demand for long distance and high speed Internet services.The company's results beat analyst's expectations.

Second quarter net income of $86.1 million, or 60c per diluted share, was up 27.2% from $67.7 million or 48c per share in second quarter 2001. EBITDA from continuing operations was $221 million, gaining 9.6% from $201.5 million. Revenue from continuing operations rose 7.2% to $438.7 million from $409.25 million.

Management raised its 2002 earnings per share guidance to a range of $2.08 to $2.20 from $2.06 to $2.18. Capex guidance for the full year is $425 million.

"When asked why the delta in guidance was not as large as the difference between expected and actual second-quarter EPS, management said it did not have full confidence in the economic environment and therefore would not raise guidance that much," Oburchay and Park said in the report.

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