euNetworks Pushes South Into Milan, Reports Q1

May 12th, 2011 by · 3 Comments

Following its new presence in Zurich, euNetworks (SIN:H23, news) extended its financial bandwidth business even further south across the Alps into Milan, Italy today.  That gives them low latency connectivity from the other financial markets in their footprint, including 8.81ms to London, 4.71ms to Frankfurt, and 1.98ms to Zurich.  euNetworks also reported earnings this morning, as it continues to put in place all the pieces of a European version of the metro-fiber-driven business we have seen take off in the past few years here in the US.  Here is a quick tabular summary of their results in context:

€ in millions Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11
- recurring 8.4 8.8 9.6 9.9 10.5 10.5
- non-recurring 0.8 0 0.6 1.2 3.2 0
Revenue 9.2 8.8 10.2 11.1 13.7 10.5
Adj EBITDA -1.2 -1.6 -1.9 0.8 1.8 0.4
Adj EBITDA margin -13% -18% -18% 8% 13% 4%
Capital Expenditures 5.5 2.3 3.4 4.5 5.2 2.8
On-net buildings 272 278 302 329 365 394

Revenues & EBITDA: Last quarter, euNetworks had more non-recurring revenues than usual, and that pendulum swung back all the way in the first quarter of 2011.  But recurring revenues held up well at10.5M, and adjusted EBITDA remained positive despite not having the aid of one-time events.  They're still at the point where they haven't scaled the business beyond the noise that happens along the way.  But the most striking feature of this report was the increase in average contract term length, which shot up from 26 months in Q4 all the way to 53 months in Q1, indicating that euNetworks probably sold more long term IRUs to wholesale customers than in the past.

Footprint expansion: Because the ground is frozen for much of the quarter, there is usually a downtick in euNetwork footprint expansion in terms of on-net building additions.  You can see that in their capex number for Q1 this year and last, however this quarter they still managed to add 29 buildings with the number still in the pipeline rising to 62.  That's a high rate for a company of this size, and gives them 394 now.  And of course there are the new routes to Stockholm, Munich, and Madrid.  They haven't put those up on their public network map yet, but here's an early peak at one version of the new map of euNetworks' assets:

Starting to look less regional and more pan-European...  Madrid next?

Categories: Financials · Low Latency · Mergers and Acquisitions

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3 Comments So Far


  • Clevus says:

    A better bet would be to get connectivity to Marseille, close the loop to Milan and then head west and south to Spain

  • Chris says:

    On the new network map, we can see that many routes of eunetworks seem to be “leased wavelength” oder “leased fiber”. But how is this possible?

    Some years ago, eunetworks bought the fiber assets from Viatel, for example their long-haul network in Germany.

    Why should eunetworks now lease fiber or even just wavelengths, when they have their own fiber network on these routes? Did eunetworks sell the Viatel infrastructure to another carrier?

    • Rob Powell says:

      I believe it was just a fiber swap, and it was not across Viatel’s entire network but was scaled back to specific pieces. Hence, for their move southward to Milan via Zurich I don’t think they have fiber to light.

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