A Dull Hatchet Job by the Washington Post

Now, I’m used to weak telecom reporting from some parts of the media, but this one really takes the cake.  The Washington Post, that bastion of newsworthiness, managed to write this wowser ^[1]:

Now a new financial crisis threatens to leave some area telecom companies much smaller, or worse.

To compete with the likes of Verizon and AT&T, a number of companies have taken on piles of debt to put down fiber optic cable or raise cell towers. That has left some, such as Ciena, Cogent and XO Communications, more vulnerable to market instability as demand dwindles for services from businesses and consumers, analysts say.

Ah, where does one start with this.  Let’s see…

• Ciena sells equipment, to Verizon and AT&T and Comcast no less.  They don’t put down fiber optic cable or raise cell towers and they have a net cash balance.  But if someone *was* out there taking on debt to do it, they’d be HAPPY to have more customers than before.
• Cogent is so ‘desperate’ right now that they are buying back their debt and spending cash on a stock buyback ^[2].  They don’t own a single cell tower nor have they ever laid any fiber to speak of, it’s all leased.  Cogent is facing pricing pressures, but it doesn’t give a rat’s ass about the credit markets.
• And XO?  They have a few LMDS sites – just enough to keep their licenses renewed, but didn’t raise debt to do that.  And they haven’t put substantial fiber in the ground since 2001, the debt from that being wiped out in bankruptcy.  A little background research would show that they just refinanced their more recent debt a few months ago, they don’t actually have any debt right now – just vast amounts of painfully preferred shares courtesy of a guy named Carl Icahn ^[3].  At the moment they are, dare I say it, flush with cash – some $400M of it.

If the Washington Post needs examples of telecoms in distress, they could at least take the trouble to *look* for one.  It’s as if this article was written from the top down, they thought up the headline first and then went out to support it but were too busy writing election editorials or something to actually do the work.

Don’t get me wrong, the effects of the economy are hitting everyone, including the three mentioned here.  It’s just that if you’re going to do a hatchet job, at least do it right.  There are telecoms for whom the crisis in the credit markets is causing trouble, whose large debt comes from laying fiber, have looming maturities, etc.  Nah, I’m not going to tell them who, make them work for it.  LOL.