Stock Report | January 14, 2017 | NNM Symbol: WIN

Windstream Holdings Inc Recommendation

HOLD

★★★★★

Price $8.02 (as of Jan 13, 2017 4:00 PM ET)

12-Mo. Target Price $9.00

Report Currency USD

Investment Style Small-Cap Value

Equity Analyst A. Zino-CFA GICS Sector Telecommunication Services Sub-Industry Integrated Telecommunication Services

Summary This company was formed through the July 2006 combination of former Alltel wireline assets and Valor Communications, and continues to grow via acquisitions. It has more than 3 million telecommunications services customer connections in rural markets.

Key Stock Statistics (Source S&P Capital IQ, Vickers, company reports) 52-Wk Range Trailing 12-Month EPS Trailing 12-Month P/E $10K Invested 5 Yrs Ago

$10.46– 4.75 $-1.68 NM NA

S&P Oper. EPS 2016E S&P Oper. EPS 2017E P/E on S&P Oper. EPS 2016E Common Shares Outstg. (M)

-1.80 -1.56 NM 96.1

Market Capitalization(B) Yield (%) Dividend Rate/Share Institutional Ownership (%)

Price Performance 30-Week Mov. Avg.

10-Week Mov. Avg.

12-Mo. Target Price

Relative Strength

GAAP Earnings vs. Previous Year Up

Down

Volume

No Change

Above Avg.

STARS

Below Avg.

40 Share Price

Beta S&P 3-Yr. Proj. EPS CAGR(%) S&P Quality Ranking

0.75 1 B

Analyst's Risk Assessment

80

LOW

MEDIUM

HIGH

Our risk assessment reflects the stable rural markets that WIN serves, and its lower-than-peer debt leverage, offset by potential risks in integrating acquisitions.

20

Revenue/Earnings Data

8 4 1-for-6 RE Volume(Mil.)

$0.771 7.48 $0.60 66

80 12 8 4 0

29

5

4

5

3

Revenue (Million $) 1Q 2Q 2016 1,373 1,360 2015 1,419 1,421 2014 1,465 1,466 2013 1,500 1,506 2012 1,545 1,538 2011 1,023 1,030

3Q 1,345 1,499 1,456 1,504 1,552 1,023

4Q -1,427 1,443 1,491 1,521 1,210

Year -5,765 5,830 5,988 6,156 4,286

Earnings Per Share ($) 2016 -2.51 -0.02 2015 -0.05 -1.13 2014 0.12 0.12 2013 0.54 0.36 2012 0.66 0.54 2011 0.30 1.08

-0.71 -0.08 0.06 0.30 0.54 0.84

E-0.44 -1.46 -0.78 1.14 0.12 -0.36

E-1.80 -0.28 -0.42 2.34 1.68 1.98

1 FMAM J J A SOND J FMAM J J A SOND J FMAM J J A SOND J FMAM J J A SOND J FMAM J J A SOND J FM

2012

2013

2014

2015

2016

Past performance is not an indication of future performance and should not be relied upon as such.

Analysis prepared by Equity Analyst A. Zino-CFA on Nov 07, 2016 10:52 AM, when the stock traded at $7.25.

Highlights ➤





Revenue is likely to decline 1.8% in 2017, following our outlook for a 5.8% drop in 2016 and a 1.1% decline in 2015. We see improved business services revenue growth from demand for IP, data and data center services, but see this more than offset by wholesale declines. Continued growth investments in fiber and broadband expansion should help limit declines despite a competitive landscape. Additionally, we see upside from fiber-to-the-tower and broadband stimulus spending. We see greater bundling opportunities on the consumer side. WIN is targeting a long-term growth rate of 3% to 5% for its enterprise business while looking to improve its consumer channel. We think WIN can sustain an adjusted EBITDA margin between 34% and 35% in 2016 and 2017. We think WIN likely will concentrate on tight cost controls and reducing network expenses. We expect capital expenditures to be about 13% to 15% of sales going forward, as WIN focuses on enhancing its network. We estimate operating loss per share of $1.80 loss in 2016 and $1.56 loss in 2017.

Investment Rationale/Risk ➤





Our recommendation is Hold. WIN is wellpositioned to capitalize on broadband opportunities and see good growth potential for its enterprise business. We see the pending acquisition of EarthLink (ELNK 6 NR) expanding WIN's network, offering $125 million in annual cost synergies, and provides access to ELNK's net operating losses ($95 million). The deal should also reduce net leverage and enhances free cash flow. We positively view prior debt reductions and the monetization of its stake in Communications Sales & Leasing. WIN now poses a stronger balance sheet and better free cash flow potential, allowing it to increase capital expenditures to focus more aggressively on growth. We note that WIN pays a $0.60 annual dividend (over 8%), and think management is committed to keeping the dividend. Risks to our recommendation and target price include increased cable competition, federal or state regulatory changes that pressure cash flow and inability to support the dividend. Using a projected enterprise value/EBITDA multiple of 5.9X, near telecom peers, we arrive at our 12-month target price of $9.00.

Fiscal year ended Dec. 31. Next earnings report expected: Late February. EPS Estimates based on S&P Capital IQ Operating Earnings; historical GAAP earnings are as reported in Company reports.

Dividend Data Amount ($)

0.150

Date Decl.

Ex-Div. Date

Stk. of Record

Payment Date

Aug 5 Dec 28 Dec 30

Jan 17 '17

Dividends have been paid since 2006. Source: Company reports. Past performance is not an indication of future performance and should not be relied upon as such.

Redistribution or reproduction is prohibited without written permission. Copyright ©2017 CFRA. This document is not intended to provide personal investment advice and it does not take into account the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. Investors should seek independent financial advice regarding the suitability and/or appropriateness of making an investment or implementing the investment strategies discussed in this document and should understand that statements regarding future prospects may not be realized. Investors should note that income from such investments, if any, may fluctuate and that the value of such investments may rise or fall. Accordingly, investors may receive back less than they originally invested. Investors should seek advice concerning any impact this investment may have on their personal tax position from their own tax advisor. Please note the publication date of this document. It may contain specific information that is no longer current and should not be used to make an investment decision. Unless otherwise indicated, there is no intention to update this document.

Stock Report | January 14, 2017 | NNM Symbol: WIN

Windstream Holdings Inc Business Summary November 07, 2016

Corporate Information

CORPORATE OVERVIEW. In July 2006, Alltel Corp. spun off its wireline operations into a separate entity. Immediately after the consummation of the tax-free spinoff, the entity merged with Valor Communications and the resulting company was renamed Windstream Corporation. In 2013, WIN formed a new holding company, Windstream Holdings, and maintained the ticker WIN. WIN operates primarily in rural markets in the southern U.S., such as Lexington, KY, and Lincoln, NE, with an average of about 20 access lines per square mile.

Investor Contact M. Michaels (501-748-7578)

CORPORATE STRATEGY. Since becoming a public company, WIN has looked to make small acquisitions and benefit from expense savings (consolidating call centers and IT systems) and expanding service bundles via broadband and digital TV.

Telephone 501-748-7000.

WIN is focused on strategic initiatives, including deploying fiber deeper into its markets and to wireless towers, expanding its data center footprint and extending broadband availability in its rural markets. WIN has also targeted its broadband product to customers without a wireline phone. WIN has made considerable investments over the past few years to support fiber-to-the-cell opportunities in an effort to benefit from wireless backhaul demand driven by the continued rapid growth of wireless data traffic. We believe WIN's strategy is focused on growth opportunities with its enterprise business customers while improving its cost structure and maintaining the stability of its consumer business. We think the company's primary objective is to generate solid and sustainable cash flows over the long-term to build shareholder value, primarily through its attractive dividend yield. WIN continues to invest in capital initiatives designed to drive improvements in network performance and provide advanced solutions to business customers. The company continues to transition revenue streams away from traditional consumer voice services to strategic growth areas of business services and consumer broadband. Diversification of its revenue streams is key to WIN's success as it combats revenue declines from customer losses and wholesale revenue declines due to intercarrier compensation reform.

Office 4001 Rodney Parham Road, Little Rock, AR 72212.

Website http://www.windstream.com

Officers Chrmn J.T. Hinson

EVP & CIO L. Langston

CEO & Pres A.W. Thomas

SVP & Treas C. Grumbos

EVP & General Counsel J.P. Fletcher

COMPETITIVE LANDSCAPE. WIN faces intense competitive pressures in its consumer service areas. Sources of competition include, but are not limited to, wireless companies, cable television companies and other communications carriers. Cable television companies have aggressively expanded in its consumer markets, offering voice and high-speed Internet services in addition to video services. Wireless competition has contributed to a reduction in WIN's voice lines and generally has caused pricing pressure in the industry. Some customers have chosen to stop using traditional wireline phone service and, instead, rely solely on wireless service.

Board Members C. B. Armitage J. H. Diefenderfer W. G. LaPerch M. G. Stoltz A. L. Wells

S. E. Beall, III J. T. Hinson L. Laque A. W. Thomas

IMPACT OF MAJOR DEVELOPMENTS. On November 7, 2016, WIN announced its intent to acquire EarthLink in an all-stock transaction valued at approximately $1.1 billion (based on the prior closing price), including gross debt. EarthLink shareholders will receive 0.818 shares of WIN shares for each EarthLink share owned. WIN shareholders will own 51% of the combined company while EarthLink shareholders will own the other 49%. The combination, according to WIN, is expected to produce at least $125 million in annual operating synergies with net present value of $900 million. We note that EarthLink has a robust fiber network with 29,000 route miles, 16,000 of which expands WIN's footprint. The deal is expected to close in the first half of 2017.

Domicile Delaware

Auditor PRICEWATERHOUSECOOPERS

In July 2014, WIN announced that it would spin off its fiber and copper networks, as well as other fixed real estate assets, as a REIT. We believe the move creates a more growth-oriented company in WIN, which will be able to focus on expanding its network and accelerating broadband investments. The transaction closed April 24, 2015.

Stockholders 304,875

In December 2011, WIN completed its acquisition of PAETEC Holding for $2.3 billion, including $1.4 billion of debt, at what we believe is a reasonable purchase price of 6X 2011 EBITDA. WIN sees potential for $100 million of operating expense synergies and use of net operating losses, and the deal improves WIN's EBITDA growth potential through data centers and business customers. In February 2010, WIN closed on its acquisition of NuVox, a privately held competitive local exchange carrier, for $647 million, or 5.6X trailing EBITDA. NuVox offered Internet Protocol-based voice and data services to approximately 90,000 business customers. In December 2010, WIN acquired both Q-Comm, a regional fiber transport and local phone service operation, for roughly $550 million, and Hosted Solutions, a data center provider, for $310 million. FINANCIAL TRENDS. Sales fell 1% in 2015, after falling 3% in 2014. For 2015, consumer and small business ILEC service revenues declined 1.5% while carrier service revenues fell 6%. Enterprise services increased 4%, while small business CLEC service revenues decreased 15%.

Redistribution or reproduction is prohibited without written permission. Copyright ©2017 CFRA.

Founded 2000 Employees 12,326

Stock Report | January 14, 2017 | NNM Symbol: WIN

Windstream Holdings Inc Quantitative Evaluations S&P Capital IQ Fair Value Rank

NR

Fair Value Calculation

NA

Expanded Ratio Analysis 1

4

5 HIGHEST

2015 0.11 14.68 23.25 98.9

2014 0.84 NM NM 99.5

2013 0.79 13.83 20.02 98.3

2012 0.79 17.99 28.68 97.4

Key Growth Rates and Averages

31 LOWEST = 1

HIGHEST = 100

WIN scored lower than 69% of all companies for which an S&P Capital IQ Report is available.

LOW NEUTRAL

Price/Sales Price/Pretax Income P/E Ratio Avg. Diluted Shares Outstg (M) Figures based on calendar year-end price

Volatility

Insider Activity

3

Based on S&P Capital IQ's proprietary quantitative model, stocks are ranked from most overvalued (1) to most undervalued (5).

Investability Quotient Percentile

Technical Evaluation

2

LOWEST

AVERAGE

HIGH

Since January, 2017, the technical indicators for WIN have been NEUTRAL.

NA

UNFAVORABLE

NEUTRAL

Past Growth Rate (%) Sales Net Income

1 Year

3 Years

5 Years

9 Years

-1.10 NM

-2.21 NM

9.25 -96.86

9.73 -83.54

Ratio Analysis (Annual Avg.) Net Margin (%) % LT Debt to Capitalization Return on Equity (%)

0.48 93.73 9.00

1.24 91.16 NA

2.10 87.48 7.20

7.98 86.23 58.04

FAVORABLE

Company Financials Fiscal Year Ended Dec. 31 Per Share Data ($) Tangible Book Value Cash Flow Earnings S&P Capital IQ Core Earnings Dividends Payout Ratio Prices:High Prices:Low P/E Ratio:High P/E Ratio:Low

2015 NM 14.09 0.28 NA 1.68 NM 53.93 4.42 NM NM

2014 NM 13.56 -0.42 NA 6.00 NM 79.78 43.07 NM NM

2013 NM 15.72 2.34 NA 6.00 NM 59.99 44.99 26 19

2012 NM 15.06 1.68 NA 6.00 NM 75.25 47.15 45 28

2011 NM 11.94 1.98 NA 6.00 NM 84.22 64.55 43 33

2010 NM 12.90 3.96 NA 6.00 152% 86.38 36.11 22 9

2009 NM 12.12 4.62 NA 6.00 130% 69.89 37.67 15 8

2008 NM 12.60 5.88 NA 6.00 102% 84.28 38.21 14 7

2007 NM 18.48 11.64 NA 6.00 52% 93.76 74.27 8 6

2006 NM 11.26 6.12 5.70 2.25 37% 86.56 66.77 14 11

5,765 NA 1,367 817 43.4 36.9% 27.4 NA

5,830 NA 1,386 572 -64.6 NM -39.5 NA

5,988 NA 1,342 628 340 30.9% 235 NA

6,156 NA 1,298 633 269 37.3% 169 NA

4,286 NA 848 558 274 37.0% 172 NA

3,712 NA 694 522 505 38.5% 311 NA

2,997 NA 538 410 546 38.7% 335 NA

3,172 1,646 493 416 718 39.4% 435 NA

3,261 1,705 540 443 1,169 21.6% 917 NA

3,033 1,398 450 210 722 38.3% 446 451

Balance Sheet & Other Financial Data (Million $) Cash 31.3 Current Assets 875 Total Assets 12,518 Current Liabilities 1,267 Long Term Debt 5,165 Common Equity 306 Total Capital 5,510 Capital Expenditures 1,055 Cash Flow 1,394 Current Ratio 0.7 % Long Term Debt of Capitalization 94.3 % Net Income of Revenue 0.5 % Return on Assets 0.2 % Return on Equity 9.0

27.8 1,004 12,713 12,489 7,983 225 8,925 786 1,347 0.1 89.4 NM NM NM

48.2 1,185 13,445 1,446 8,622 840 9,547 841 1,577 0.8 90.3 3.9 NA NA

132 1,300 13,982 2,168 8,115 1,105 10,162 1,101 1,466 0.6 80.6 2.7 1.2 12.7

227 1,518 14,392 1,460 9,025 1,498 10,737 702 1,020 1.0 84.1 4.0 1.3 14.5

42.3 688 11,354 986 7,187 831 8,156 415 1,004 0.7 88.1 8.4 3.0 56.9

1,063 1,456 9,145 709 6,271 261 6,556 298 872 2.1 95.7 11.2 3.9 130.4

297 709 8,009 665 5,358 252 6,681 318 928 1.1 80.2 13.7 5.4 91.4

72.0 498 8,211 641 5,331 700 7,137 366 1,457 0.8 74.7 28.1 11.3 156.8

387 877 8,031 685 5,456 470 6,917 374 895 1.3 78.9 14.7 6.9 22.5

Income Statement Analysis (Million $) Revenue Operating Income Depreciation Interest Expense Pretax Income Effective Tax Rate Net Income S&P Capital IQ Core Earnings

Data as originally reported in Company reports.; bef. results of disc opers/spec. items. Per share data adj. for stk. divs.; EPS diluted. E-Estimated. NA-Not Available. NM-Not Meaningful. NR-Not Ranked. UR-Under Review. Redistribution or reproduction is prohibited without written permission. Copyright ©2017 CFRA.

Stock Report | January 14, 2017 | NNM Symbol: WIN

Windstream Holdings Inc Sub-Industry Outlook

Industry Performance

Our fundamental outlook for the integrated telecommunication services (wireline) sub-industry for the next 12 months is neutral. We expect revenue pressure to remain, but think broadband growth and cost savings will yield modest free cash flow growth to support dividends. We have a positive opinion on select, high dividend paying companies within the sector. Due to consolidation, the two dominant carriers in the sub-industry are AT&T Inc. (T 41 Buy) and Verizon Communications (VZ 53 Hold). Merger activity at mid-size carriers included CenturyLink's (CTL 25 Buy) 2011 acquisitions of both Qwest Communications and Savvis, and Frontier Communications' (FTR 4 Hold) prior purchase of assets from VZ and T.

GICS Sector: Telecommunication Services Sub-Industry: Integrated Telecommunication Services

benefit amid a still low but rising interest rate environment. The yield for the industry is more than double the the overall S&P 500. We note that dividend payout ratios for T, CTL, FTR and VZ are all between 50% and 80% of adjusted free cash flow, leaving potential for dividend growth. After dividend cuts by several mid-sized telecom companies in previous years, we think payout ratios for most are at levels that can support current dividends. The sector's lack of international exposure alleviates it from currency risks and global macro concerns outside the U.S.

Based on S&P 1500 Indexes Five-Year market price performance through Jan 14, 2017 S&P 1500

Sub-Industry

70%

Year-to-date through January 6, 2017, the Integrated Telecommunications sub-industry has fallen 1.3% compared with a 1.6% increase for the S&P 1500 Composite Index. In 2016, the Integrated Telecommunication Services sub-industry index rose 18.3%, versus a 10.6% increase in the S&P 1500 Composite Index. We have a positive fundamental outlook, and think most stocks offer higher dividend yields compared to Treasury bonds and the broader benchmarks. The P/E for the group is at a discount to the S&P 1500.

50%

% Change

Although we anticipate subscriber growth of 2%-3% through 2018, wireless growth is likely to remain constrained reflecting the ongoing shift to installment loans/leasing programs (revenue recognized over an extended period). We see a consumer sentiment shift towards value service providers given their lower cost, unlimited data options, improving networks, and availability of leasing options. In wireline, we expect continued access line weakness, but stable broadband subscriber gains. Competitive threats from cable and satellite providers should weigh on pricing and subscriber growth. However, we see continued cost cutting, merger synergies, and business market improvements supporting free cash flow. As wireless spending moderates, capital intensity should be between 14% and 16% through the end of 2017. Spending in the wireline space has remained relatively stable and we do not expect any major increase in capital expenditures through 2017.

Sector

90%

30%

10%

-10%

-30%

-50%

--Angelo Zino, CFA

-70%

-90% 2011

2012

2013

2014

2015

2016

NOTE: All Sector & Sub-Industry information is based on the Global Industry Classification Standard (GICS) Past performance is not an indication of future performance and should not be relied upon as such.

We think the fundamentals of the Telecom Services sector support the thesis that the sector should be viewed as an "equity bond" and shares should

Sub-Industry : Integrated Telecommunication Services Peer Group*: Incumbent Local Exchange Carriers (Independent) Peer Group Windstream Holdings Alaska Communic Sys Grp CenturyLink Inc Cincinnati Bell Consolidated Communic Frontier Communications

Stock Symbol

Stk.Mkt. Cap. (Mil. $)

Recent Stock Price($)

52 Week High/Low($)

WIN

771

8.02

10.46/4.75

0.75

7.5

NM

NA

B

31

0.5

94.3

ALSK CTL CBB CNSL FTR

85 13,809 969 1,334 4,153

1.66 25.26 23.05 26.33 3.54

1.97/1.30 33.45/21.94 25.65/14.00 30.23/17.76 5.85/3.10

0.48 0.60 1.17 0.75 0.80

Nil 8.6 Nil 5.9 11.9

NM 15 8 69 NM

NA NA 11.50 NA NA

B B B B B

21 75 35 63 52

5.6 4.9 24.0 NM NM

53.7 54.2 133.3 84.1 72.1

Beta

Yield (%)

P/E Ratio

NA-Not Available NM-Not Meaningful NR-Not Rated. *For Peer Groups with more than 15 companies or stocks, selection of issues is based on market capitalization.

Redistribution or reproduction is prohibited without written permission. Copyright ©2017 CFRA.

Fair Value Calc.($)

S&P Return on Quality IQ Revenue Ranking %ile (%)

LTD to Cap (%)

Stock Report | January 14, 2017 | NNM Symbol: WIN

Windstream Holdings Inc Analyst Research Notes and other Company News November 7, 2016 09:56 am ET ... S&P CAPITAL IQ KEEPS HOLD OPINION ON SHARES OF WINDSTREAM HOLDINGS, INC. (WIN 7.24***): We keep our 12-month target price at $9.00, on near peers EV/EBITDA of 5.9X our '17 estimate. We widen our '16 loss per share view to $1.80 from $1.67 and '17's to a $1.56 loss from $1.45 loss. WIN posts Q3 loss per share of $0.53 vs. $0.08 loss, wider than the $0.50 Capital IQ loss. WIN is acquiring EarthLink (ELNK 6 NR) for 0.818 WIN shares per ELNK share and note $384M in net debt. We see the deal expanding WIN's network, offers $125M in annual cost synergies, and provides access to ELNK's net operating losses ($95M). The deal reduces net leverage and enhances free cash flow. /A. Zino-CFA August 4, 2016 11:19 am ET ... S&P GLOBAL KEEPS HOLD OPINION ON SHARES OF WINDSTREAM HOLDINGS, INC. (WIN 8.99***): We keep our 12-month target price at $9.00, on peer-average EV/EBITDA of 5.7X our '17 estimate. We narrow our '16 operating loss per share estimate to $1.67 from $1.88 and '17's to a $1.45 loss from a $2.06 loss. WIN posts Q2 loss per share of $0.48 vs. $0.38 loss, wider than the $0.38 Capital IQ loss estimate. Sales fell 4.3%, hurt by lower carrier as well as consumer and small business ILEC service revenues. We positively view enterprise growth, with focus on the mid-market. We note a dividend yield of 6.7% and positively view ongoing efforts to reduce its debt position. /A. Zino-CFA August 1, 2016 Effective July 27, 2016, J. David Works, Jr., is no longer serving as President Enterprise for Windstream Holdings, Inc. and Windstream Services, LLC or as an executive officer of Windstream. May 19, 2016 Windstream announced that Beth A. Lackey has been appointed senior vice president of carrier operations. In this new role - specifically created to support the company's ongoing commitment to providing an exceptional experience for its carrier and wholesale customers - Lackey will oversee service delivery, service assurance, and the customer experience team for the carrier business unit. As Windstream continues expanding and enhancing its network, Lackey will lead and guide initiatives to assess current internal business processes, analyzing the results in order to build and implement efficiencies that enhance the overall carrier customer experience - from order entry to the ongoing service of customers. Lackey brings a wealth of experience from virtually every aspect of telecommunications and in her most recent position, she led service delivery in North America and Asia for Level 3 Communications. With more than 35 years in the industry, she has also served in a range of leadership roles at tw telecom, Covad Communications and US West, building her expertise in areas including customer experience strategy, network and customer operations, field services, sales, marketing, and process improvement. May 18, 2016 Windstream has appointed Jarrod Berkshire as the president of operations for Georgia. In his new role, Berkshire will be based in Dalton, Ga., and oversee the nearly 450 managers and technicians who operate Windstream's voice and broadband network in the state. Berkshire was previously director of outside plant engineering for Windstream's seven-state southeast region. May 5, 2016 09:53 am ET ... S&P GLOBAL REDUCES OPINION ON SHARES OF WINDSTREAM HOLDINGS TO HOLD FROM BUY (WIN 9.31***): We raise our 12-month target price to $9 from $8, on peer-average EV/EBITDA of 6X our '17 estimate. We keep our '16 operating loss per share estimate at $1.88 and '17's at a $2.06 loss. WIN posts Q1 loss per share of $0.23 vs. $0.26 EPS, narrower than the $0.55 Capital IQ loss estimate. Sales were flat, as lower carrier service revenue was offset by enterprise growth. Consumer and small business ILEC sales fell 1% but grew sequentially, on high-speed Internet growth. We see further debt reduction efforts as well as improving enterprise profitability and broadband opportunities. /A. Zino-CFA February 25, 2016 01:48 pm ET ... S&P CAPITAL IQ KEEPS BUY RECOMMENDATION ON SHARES OF WINDSTREAM HOLDINGS, INC. (WIN 6.70****): We keep our 12-month target price at $8, on peer-average EV/EBITDA of 7.0X our '17 estimate. We keep our '16 operating loss per share estimate at $1.88 and start '17's at $2.06 loss. WIN posts Redistribution or reproduction is prohibited without written permission. Copyright ©2017 CFRA.

Q4 loss per share of $0.28 vs. $0.18 EPS, beating the $0.46 loss estimate. Sales fell 1.1%, near expectations, driven by lower carrier revenue. We positively view ongoing debt reduction efforts and believe WIN's free cash flow is able to sustain its dividend (yielding 8.8%). We are optimistic about WIN's broadband opportunities and enterprise growth. We view shares as undervalued to peers. /A. Zino-CFA February 12, 2016 Windstream Holdings, Inc. appointed Jeannie H. Diefenderfer and Larry Laque to the Board of Directors. November 5, 2015 10:02 am ET ... S&P CAPITAL IQ KEEPS BUY RECOMMENDATION ON SHARES OF WINDSTREAM HOLDINGS, INC. (WIN 6.38****): We keep our 12-month target price at $8, on peer-average EV/EBITDA of 6.7X. We narrow our '15 operating loss per share estimate to $0.85 from $1.91 and '16's to a $1.88 loss from $2.19 loss. WIN posts Q3 loss per share of $0.07 vs. $0.18 EPS, beating the $0.34 loss estimate. Sales rose 3.7%, primarily due to CAF-2 revenue contribution. We positively view the sale of its data center business for $575M, which should help reduce debt and enhance WIN's broadband capabilities. We see WIN benefiting from broadband opportunities and enterprise growth. We note dividend yield over 9%. /A. Zino-CFA August 31, 2015 02:31 pm ET ... S&P CAPITAL IQ KEEPS BUY RECOMMENDATION ON SHARES OF WINDSTREAM HOLDINGS, INC. (WIN 7.14****): We raise our 12-month target price to $8 from $6, on a higher revised peer-average EV/EBITDA of 7X. We widen our '15 operating loss per share estimate to $1.91 from $1.07 and '16's to a $2.19 loss from $1.81 loss. We believe WIN is well-positioned to capitalize on broadband opportunities and see good growth potential for its enterprise business. We are encouraged by share repurchase plans following a steep share price decline. We view WIN's dividend yield of over 8% as attractive (our target price implies a 7.5% yield) but note volatile share price movement in recent quarters. /A. Zino-CFA August 6, 2015 10:39 am ET ... S&P CAPITAL IQ KEEPS BUY RECOMMENDATION ON SHARES OF WINDSTREAM HOLDINGS, INC. (WIN 5.29****): We cut our 12-month target price to $6 from $8, on a lower peer-average EV/EBITDA of 6X. We narrow our '15 operating loss per share estimate to $1.07 from $1.87 and '16's to a $1.81 loss from $2.16. WIN posts a Q2 loss per share of $0.38 vs. $0.25 EPS, beating the $0.63 consensus loss from Capital IQ. Sales rose fractionally from Q1, led by higher enterprise and consumer growth. We positively view stabilizing margins and share repurchase plans. We think WIN is well-positioned to capitalize on broadband opportunities and view WIN's dividend yield of over 10% as attractive. /A. Zino-CFA

Stock Report | January 14, 2017 | NNM Symbol: WIN

Windstream Holdings Inc Analysts' Recommendations Monthly Average Trend

Wall Street Consensus Opinion Buy

Buy/Hold

Hold

Weak Hold

B

BH

H

WH

Sell S

No Opinion

HOLD

WIN Trend

Companies Offering Coverage

Wall Street Average B

BofA Merrill Lynch Citigroup Inc Cowen and Company Deutsche Bank Gabelli & Company, Inc. Jefferies LLC Morgan Stanley Morningstar Inc. Raymond James & Associates Stephens, Inc. UBS Investment Bank Wells Fargo Securities, LLC

BH H WH S

Number of Analysts Following Stock 30 20 10

Stock Price ($ 000) 1000

1000

1000

1000

F

M

A

M

J

J

A

S

O

N

D

J

F

M

A

M

J

2015

J

A

S

O

N

D

J

2016

Of the total 12 companies following WIN, 12 analysts currently publish recommendations. No. of Recommendations 2 0 7 1 2 0 12

Buy Buy/Hold Hold Weak Hold Sell No Opinion Total

% of Total

1 Mo. Prior 3 Mos. Prior

17 0 58 8 17 0 100

0 0 0 0 0 0 0

1 0 9 2 2 0 14

Wall Street Consensus Estimates Estimates

2015

Wall Street Consensus vs. Performance 2016

2017

2015 Actual $-0.28

8 4 0 -4

S

O

N

D

J

F

M

A

M

J

2015

Fiscal Years 2017 2016 2017 vs. 2016 Q4'17 Q4'16 Q4'17 vs. Q4'16

J

A

S

O

N

D

J

2016

Avg Est. -1.73 -3.55 51%

High Est. -1.35 -1.80 25%

Low Est. -2.40 -3.98 40%

# of Est. 10 7 43%

Est. P/E NM NM NA

-0.45 -0.51 12%

-0.30 -0.41 27%

-0.57 -0.78 27%

5 7 -29%

NM NM NA

A company's earnings outlook plays a major part in any investment decision. S&P Capital IQ organizes the earnings estimates of over 2,300 Wall Street analysts, and provides their consensus of earnings over the next two years, as well as how those earnings estimates have changed over time. Note that the information provided in relation to consensus estimates is not intended to predict actual results and should not be taken as a reliable indicator of future performance.

Redistribution or reproduction is prohibited without written permission. Copyright ©2017 CFRA.

For fiscal year 2016, analysts estimate that WIN will earn US$ -3.55. For the 3rd quarter of fiscal year 2016, WIN announced earnings per share of US$ -0.71, representing 20% of the total annual estimate. For fiscal year 2017, analysts estimate that WIN's earnings per share will grow by 51% to US$ -1.73.

Stock Report | January 14, 2017 | NNM Symbol: WIN

Windstream Holdings Inc Glossary S&P Capital IQ STARS Since January 1, 1987, S&P Capital IQ Equity Research has ranked a universe of U.S. common stocks, ADRs (American Depositary Receipts), and ADSs (American Depositary Shares) based on a given equity's potential for future performance. Similarly, S&P Capital IQ Equity Research has ranked Asian and European equities since June 30, 2002. Under proprietary STARS (STock Appreciation Ranking System), equity analysts rank equities according to their individual forecast of an equity's future total return potential versus the expected total return of a relevant benchmark (e.g., a regional index (S&P Asia 50 Index, S&P Europe 350® Index or S&P 500® Index)), based on a 12-month time horizon. STARS was designed to meet the needs of investors looking to put their investment decisions in perspective. Data used to assist in determining the STARS ranking may be the result of the analyst's own models as well as internal proprietary models resulting from dynamic data inputs.

S&P Capital IQ Quality Ranking (also known as S&P Capital IQ Earnings & Dividend Rankings) - Growth and stability of earnings and dividends are deemed key elements in establishing S&P Capital IQ's earnings and dividend rankings for common stocks, which are designed to capsulize the nature of this record in a single symbol. It should be noted, however, that the process also takes into consideration certain adjustments and modifications deemed desirable in establishing such rankings. The final score for each stock is measured against a scoring matrix determined by analysis of the scores of a large and representative sample of stocks. The range of scores in the array of this sample has been aligned with the following ladder of rankings: A+ Highest B Below Average A High B- Lower A- Above Average C Lowest B+ Average D In Reorganization NR Not Ranked

S&P Capital IQ EPS Estimates S&P Capital IQ earnings per share (EPS) estimates reflect analyst projections of future EPS from continuing operations, and generally exclude various items that are viewed as special, non-recurring, or extraordinary. Also, S&P Capital IQ EPS estimates reflect either forecasts of equity analysts; or, the consensus (average) EPS estimate, which are independently compiled by Capital IQ, a data provider to S&P Capital IQ Equity Research. Among the items typically excluded from EPS estimates are asset sale gains; impairment, restructuring or merger-related charges; legal and insurance settlements; in process research and development expenses; gains or losses on the extinguishment of debt; the cumulative effect of accounting changes; and earnings related to operations that have been classified by the company as discontinued. The inclusion of some items, such as stock option expense and recurring types of other charges, may vary, and depend on such factors as industry practice, analyst judgment, and the extent to which some types of data is disclosed by companies.

S&P Capital IQ Core Earnings S&P Capital IQ Core Earnings is a uniform methodology for adjusting operating earnings by focusing on a company's after-tax earnings generated from its principal businesses. Included in the definition are employee stock option grant expenses, pension costs, restructuring charges from ongoing operations, write-downs of depreciable or amortizable operating assets, purchased research and development, M&A related expenses and unrealized gains/losses from hedging activities. Excluded from the definition are pension gains, impairment of goodwill charges, gains or losses from asset sales, reversal of prior-year charges and provision from litigation or insurance settlements.

S&P Capital IQ 12-Month Target Price The equity analyst's projection of the market price a given security will command 12 months hence, based on a combination of intrinsic, relative, and private market valuation metrics, including S&P Capital IQ Fair Value.

S&P Capital IQ Equity Research S&P Capital IQ Equity Research is produced and distributed by Accounting Research & Analytics, LLC d/b/a CFRA ("CFRA US"). Certain research is distributed by CFRA UK Limited (together with CFRA US, "CFRA"). Certain research is produced by Standard & Poor's Malaysia Sdn. Bhd ("S&P Malaysia") under contract to CFRA US. S&P CAPITAL IQ™ is used under license. The owner of this trademark is S&P Global Inc. or its affiliate, which are not affiliated with CFRA or the author of this content.

Abbreviations Used in S&P Capital IQ Equity Research Reports CAGR - Compound Annual Growth Rate CAPEX - Capital Expenditures CY - Calendar Year DCF - Discounted Cash Flow DDM - Dividend Discount Model EBIT - Earnings Before Interest and Taxes EBITDA - Earnings Before Interest, Taxes, Depreciation and Amortization Redistribution or reproduction is prohibited without written permission. Copyright © 2017 CFRA.

EPS - Earnings Per Share EV - Enterprise Value FCF - Free Cash Flow FFO - Funds From Operations FY - Fiscal Year P/E - Price/Earnings P/NAV - Price to Net Asset Value PEG Ratio - P/E-to-Growth Ratio PV - Present Value R&D - Research & Development ROCE - Return on Capital Employed ROE - Return on Equity ROI - Return on Investment ROIC - Return on Invested Capital ROA - Return on Assets SG&A - Selling, General & Administrative Expenses SOTP - Sum-of-The-Parts WACC - Weighted Average Cost of Capital

Dividends on American Depository Receipts (ADRs) and American Depository Shares (ADSs) are net of taxes (paid in the country of origin). S&P Capital IQ Qualitative Risk Assessment Reflects an equity analyst's view of a given company's operational risk, or the risk of a firm's ability to continue as an ongoing concern. The Qualitative Risk Assessment is a relative ranking to the S&P U.S. STARS universe, and should be reflective of risk factors related to a company's operations, as opposed to risk and volatility measures associated with share prices. For an ETF this reflects on a capitalization-weighted basis, the average qualitative risk assessment assigned to holdings of the fund.

STARS Ranking system and definition:

★★★★★ 5-STARS (Strong Buy):

Total return is expected to outperform the total return of a relevant benchmark, by a wide margin over the coming 12 months, with shares rising in price on an absolute basis. ★★★★★ 4-STARS (Buy): Total return is expected to outperform the total return of a relevant benchmark over the coming 12 months, with shares rising in price on an absolute basis. ★★★★★ 3-STARS (Hold): Total return is expected to closely approximate the total return of a relevant benchmark over the coming 12 months, with shares generally rising in price on an absolute basis. ★★★★★ 2-STARS (Sell): Total return is expected to underperform the total return of a relevant benchmark over the coming 12 months, and the share price not anticipated to show a gain. ★★★★★1-STAR (Strong Sell): Total return is expected to underperform the total return of a relevant benchmark by a wide margin over the coming 12 months, with shares falling in price on an absolute basis.

Relevant benchmarks: In North America, the relevant benchmark is the S&P 500 Index, in Europe and in Asia, the relevant benchmarks are the S&P Europe 350 Index and the S&P Asia 50 Index, respectively.

Stock Report | January 14, 2017 | NNM Symbol: WIN

Windstream Holdings Inc Disclosures S&P GLOBAL™ and S&P CAPITAL IQ™ are used under license. The owner of these trademarks is S&P Global Inc. or its affiliate, which are not affiliated with CFRA or the author of this content. Stocks are ranked in accordance with the following ranking methodologies:

STARS Stock Reports: Qualitative STARS recommendations are determined and assigned by equity analysts. For reports containing STARS recommendations refer to the Glossary section of the report for detailed methodology and the definition of STARS rankings.

Quantitative Stock Reports: Quantitative recommendations are determined by ranking a universe of common stocks based on 5 measures or model categories: Valuation, Quality, Growth, Street Sentiment, and Price Momentum. In the U.S., a sixth sub-category for Financial Health will also be displayed. Percentile scores are used to compare each company to all other companies in the same universe for each model category. The five (six) model category scores are then weighted and rolled up into a single percentile ranking for that company. For reports containing quantitative recommendations refer to the Glossary section of the report for detailed methodology and the definition of Quantitative rankings.

STARS Stock Reports and Quantitative Stock Reports: The methodologies used in STARS Stock Reports and Quantitative Stock Reports (collectively, the "S&P Capital IQ Research Reports" or "Research Reports") reflect different criteria, assumptions and analytical methods and may have differing recommendations. The methodologies and data used to generate the different types of Research Reports are believed by the author and distributor reasonable and appropriate. Generally, CFRA does not generate reports with different ranking methodologies for the same issuer. However, in the event that different methodologies or data are used on the analysis of an issuer, the methodologies may lead to different views or recommendations on the issuer, which may at times result in contradicting assessments of an issuer. CFRA reserves the right to alter, replace or vary models, methodologies or assumptions from time to time and without notice to clients.

Global STARS Distribution as of September 30, 2016 North America 25.0% 50.6% 24.4% 100%

Europe 29.3% 53.7% 17.0% 100%

Past performance is not necessarily indicative of future results. This document may contain forward-looking statements or forecasts; such forecasts are not a reliable indicator of future performance. This report is not intended to, and does not, constitute an offer or solicitation to buy and sell securities or engage in any investment activity. This report is for informational purposes only. Recommendations in this report are not made with respect to any particular investor or type of investor. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors and this material is not intended for any specific investor and does not take into account an investor's particular investment objectives, financial situations or needs. Before acting on any recommendation in this material, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Additional information on a subject company may be available upon request. CFRA's financial data provider is S&P Global Market Intelligence. THIS DOCUMENT CONTAINS COPYRIGHTED AND TRADE SECRET MATERIAL DISTRIBUTED UNDER LICENSE FROM S&P GLOBAL MARKET INTELLIGENCE. FOR RECIPIENT'S INTERNAL USE ONLY.

STARS Stock Reports: Ranking Buy Hold Sell Total

The content of this report and the opinions expressed herein are those of CFRA based upon publicly-available information that CFRA believes to be reliable and the opinions are subject to change without notice. This analysis has not been submitted to, nor received approval from, the United States Securities and Exchange Commission or any other regulatory body. While CFRA exercised due care in compiling this analysis, CFRA AND ALL RELATED ENTITIES SPECIFICALLY DISCLAIM ALL WARRANTIES, EXPRESS OR IMPLIED, to the full extent permitted by law, regarding the accuracy, completeness, or usefulness of this information and assumes no liability with respect to the consequences of relying on this information for investment or other purposes. No content (including ratings, credit-related analyses and data, valuations, model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of CFRA. The Content shall not be used for any unlawful or unauthorized purposes. CFRA and any third-party providers, as well as their directors, officers, shareholders, employees or agents do not guarantee the accuracy, completeness, timeliness or availability of the Content.

Asia 16.1% 77.4% 6.5% 100%

Global 24.6% 54.7% 20.7% 100%

Analyst Certification STARS Stock Reports are prepared by the equity research analysts of CFRA and S&P Malaysia, under contract to CFRA. All of the views expressed in STARS Stock Reports accurately reflect the research analyst's personal views regarding any and all of the subject securities or issuers. Analysts generally update stock reports at least four times each year. No part of analyst, CFRA, or S&P Malaysia compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed in a STARS Stock Report. About S&P Capital IQ Equity Research's Distributors: This Research Report is published and originally distributed by CFRA US, with the following exceptions: In the UK/EU/EEA, it is published and originally distributed by CFRA UK Limited, an Appointed Representative of Hutchinson Lilley Investments LLP, which is regulated by the Financial Conduct Authority (No. 582181), and in Malaysia by S&P Malaysia, which is regulated by Securities Commission Malaysia, (No. CMSL/A0181/2007) under license from CFRA US, and its subsidiaries do not distribute reports to individual (retail) investors and maintain no responsibility for reports redistributed by third parties such as brokers or financial advisors.

General Disclosure Notice to all jurisdictions: Where Research Reports are made available in a language other than English and in the case of inconsistencies between the English and translated versions of a Research Report, the English version will control and supersede any ambiguities associated with any part or section of a Research Report that has been issued in a foreign language. Neither CFRA nor its affiliates guarantee the accuracy of the translation.

Redistribution or reproduction is prohibited without written permission. Copyright © 2017 CFRA.

The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and Capital IQ, Inc. ("Capital IQ"). GICS is a service mark of MSCI and Capital IQ and has been licensed for use by CFRA. For residents of the European Union/European Economic Area: Research reports are originally distributed by CFRA UK Limited (company number 08456139 registered in England & Wales with its registered office address at 131 Edgware Road, London, W2 2AP, United Kingdom). CFRA UK Limited is an Appointed Representative of Hutchinson Lilley Investments LLP, which is regulated by the UK Financial Conduct Authority (No. 582181). For residents of Malaysia: Research reports are originally produced and distributed by S&P Malaysia, under license from CFRA US. S&P Malaysia is regulated by Securities Commission Malaysia (License No. CMSL/A0181/2007). For residents of all other countries: Research reports are originally distributed Accounting Research & Analytics, LLC d/b/a CFRA. Copyright © 2017 CFRA. All rights reserved. CFRA, the CFRA inverted pyramid logo, and STARS are registered trademarks of CFRA.