Alternative network services provider XO Communications (news) reported earnings after the bell, finally drawing a close to 2008 with their habitual last minute filing. Revenue grew sequentially to $375.2M and EBITDA of $34.4M was reasonably solid. The company therefore met its annual EBITDA guidance easily and exceeded the top end of its revenue guidance range by $5M. That doesn’t mean XO is burning up the tracks – its annual revenue growth of 3.4% for 2008 remains weak compared to the field. Yet given the financial crisis we can say that the company’s operations don’t seem to be showing the strain that its shareholders are feeling.
There was some risk that XO would see more effects from the economic crisis than other providers, if only because they have more legacy revenue than most and they are dependent on ILEC facilities for a large portion of their revenues despite their substantial metro footprint. But with sequential growth, they do seem to be holding the line. Guidance for 2009 was not given.
XO did give some details on what they will be doing with all that cash they got from Carl Icahn last summer. They are expanding their nationwide backbone capacity again, deploying gear capable of 1.6Tbps. This is probably the Infinera (INFN: chart, news) ILS2 gear that came out over the summer. They are also deploying more edge routing capacity and are moving deeper into their Ethernet over copper deployment. The latter is something one doesn’t hear too many details about, and I’m curious if it will ever really catch on.
If deployment of gear is done correctly in COs and if the connectivity infrastructure is supported by the ILECs and regional copper owners, the EoC services can get close to T1 sales at an ISP.