Relative Valuations For Competitive Telecoms – Q2/2010

Following up on updates to my revenue/capex and EBITDA margin/cashflow posts, we take a look at the overall relative valuations across the sector since the first quarter of 2008.  The metric here is the ratio between Enterprise Value and adjusted EBITDA, which is a common way of looking at valuations in this sector.  Missing from the comparison are Sprint Wireline and RCN Metro, simply because we can’t calculate an EV for them as they are not separately traded.  With no further ado, here is the updated chart:

As you can see, valuations actually took a hit in the second quarter across the board, falling between 4 and a little over 9, but mostly around 6.  No company on the chart saw an increase, whereas this metric didn’t actually get hurt much during the recession.  Highly levered Level 3 continues to lead the pack, while Deltacom continues to get no respect despite its improving margins of late.  But the most punishment in the first half of 2010 fell upon growth leaders Abovenet, CBeyond, and Cogent.  That’s about the only thing the three companies have in common, actually…

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Categories: CLEC · Financials · Internet Backbones · Metro fiber