Telecom Ramblings

Neutral Tandem (NASDAQ:TNDM - chart, news) reported earnings this morning, continuing their steady performance with revenue of $44.7M, which met guidance but was flat sequentially.  EBITDA of $22.4M was up sequentially, which brought the full year number to $84.6M – just above the guided range.    Overall, a steady quarter but perhaps not as spectacular as some have been accustomed to, but this is probably due to fewer business days in the quarter and hence fewer billable minutes than they might otherwise have had.

The company also threw its hat into the Ethernet Exchange ring alongside Equinix (NASDAQ:EQIX - chart, news) and CENX.  I have been wondering what Neutral Tandem’s plan for the future is, since even AT&T is now discussing the end of the PSTN.  Strategically, an Ethernet exchange business makes sense for these guys.  They are already out there serving many of the same customers with neutral exchange points for voice, extending the same kind of business to Ethernet seems to be a complementary angle.  The initial deployment will reach 14 of the largest bandwidth markets in the USA.

Will they succeed?  That’s impossible to say.  Since this business model is not well developed yet, it is not clear how many players make sense or what size is required for scale.  However, I think we can expect more such players to emerge.