Here’s a small-cap, Big Board-traded telecom stock that’s generally ignored — but shouldn’t be now. Underappreciated on Wall Street, Cincinnati Bell (NYSE:CBB) is a provider of phone and wireless communications, as well info-tech and data-center services in Ohio,  Kentucky and Indiana.

Its stock has perked up recently as some big institutional investors have been snapping up shares. The reason: On Feb. 9, Cincinnati Bell announced it’s evaluating the merits of selling or spinning off its growing data center unit which, along with the IT services, accounts for about 25% of the company’s total revenues and some 20% of its earnings before interest, taxes, depreciation and amortization (EBITDA).

Among the big stakeholders are a Mario Gabelli mutual fund, which now owns 10.5%; investment manager BlackRock (NYSE:BLK), with 9.2%; Peninsula Capital, 8.9%; and Wells Fargo (NYSE:WFC), 6.6%. Most individual investors, however, have yet to grasp what’s going on and what the potential deal signifies. A sale or spin-off of this key unit would optimize shareholder value in Cincinnati Bell, unlocking the true worth of its parts.

Operating under the name CyrusOne, the data center unit specializes in enterprise data collection and management, with 23 facilities in the U.S., Britain and Singapore. It boasts an array of big customers that include 20 of the global top-100 companies. CyrusOne aspires to be the preferred global data center provider to the Fortune 1000 companies. The other part of Cincinnati Bell is its communications operations, which generated revenues of $1.3 billion in 2011. The whole company produced revenues of $1.46 billion for the year.

But CyrusOne has been performing superbly,  posting revenue growth of 21% in 2011’s fourth quarter and 47% growth for the year. “Using a peer group average valuation of 10 times 2012 estimated EBITDA, CyrusOne could be valued at $1.2 billion,” figures Joseph Cornell, president of Spin-Off Advisors. He puts the enterprise value of Cincinnati Bell at $3.4 billion. It now has a market cap of about $800 million and trades at 6.2 times estimated EBITDA.

Cornell estimates that Cincinnati Bell will take about six to 12 months to make a final determination on whether to sell or spin off CyrusOne.

That should give investors plenty of time to jump into the stock, which has sprinted higher this year, to a 52-week high of $3.98 a share from $2.93 on Dec. 14. Some analysts, Cornell included, forecast it will trade between $4 and $5 over the next six to 12 months.

Analyst Kathryn M. Drew of Value Line, an independent investment research outfit, predicts shares of Cincinnati Bell “will likely outpace the broader market over the coming six to 12 months.” She adds that the “earnings growth we envision in the coming years gives this equity wide appreciation potential over the pull to 2014-2016.” She says risk-tolerant momentum and buy-and-hold investors may want to consider buying the stock.

Value Line ranks Cincinnati Bell as No. 1 in “timeliness,” the highest rating in its stock-valuation system. The company is poised for solid top-line and bottom-line gains, says Drew, in part because of the CyrusOne’s strength. And improving conditions at Cincinnati Bell’s wireline operations, she notes, should help boost performance over the long term.

Analyst Todd Rosenbluth of S&P Capital IQ thinks well of Cincinnati Bell’s strategic review regarding its data center operations, figuring a partial IPO or partial sale is more likely than a full separation. But whatever it decides to do, Cincinnati Bell needs to look at possible alternatives because of stiff competition in the industry. S&P Capital IQ forecasts revenue growth of 1% in 2012 and 2% in 2013, with growth being driven by data center operations.

With larger telecom rivals gaining market share, “we expect challenges to persist,” says Rosenbluth. Last year, for instance, wireline revenues fell 1%, while wireless dropped 4%, hurt largely by competitive pressure, he notes.

That’s why a CyrusOne spin-off or sale is deemed imperative for the company to regain momentum — and for its stock to stay in an uptrend mode. So put Cincinnati Bell on your radar — and don’t ignore it.