Citizens Communications shares fall after 1Q profit declines

NEW YORK—Shares of Citizens Communications Co. fell Monday after the telecommunications service provider's first-quarter profit declined, hurt by higher-than-expected access line losses.

Citizens provides communications services rural areas and small and medium-sized towns and cities.

The company's access line loss of 43,000 was well below the Citi Investment Research analyst Michael Rollins' estimate of 24,000. Rollins said he was disappointed by the pace of the company's stock buyback program. He rates the shares "Hold."

"CZN only repurchased roughly $25 million in stock versus our estimate of $50 million," the analyst wrote. "We were disappointed by the pace of the repurchase, as the company purchased a substantial amount of debt in the quarter instead."

Soleil Securities analyst Todd Rethemeier, however, kept a "Buy" rating on Citizens and said the quarter's results generally met his expectations. The analyst had predicted line losses of 40,000.

"Just like other rural phone companies, the access line problem is not customer churn, but rather customer activations," he wrote. Basically, people are not canceling service because of the economic slowdown, but they aren't moving into new homes and activating phone lines either.

Shares of Stamford, Conn.-based Citizens fell 84 cents, or 7.4 percent, to $10.46 in afternoon trading. In the past 52 weeks, the stock has traded between $9.75 and $15.98.

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