COLT Reports, Looks to Raise Cash

European alternative fiber operator Colt Group (LON:COLT, news) reported Q4 and full year 2008 earnings today.  Total revenue increased to €427.5M from €420.7M in the third quarter.  Overall in 2008 on a constant currency basis revenues increased 2.4%, the company has been driving data revenues while churning off voice revenues for several years now.  Data revenues in Q4 rose to 55% of the total.  It remains unclear just how long the company will run in place in terms of total revenue, but the economy surely won’t help.

The favorable change in revenue mix and continuing cost reduction efforts have helped EBITDA some, reaching €78.6M in the fourth quarter.  Free cash flow of €18.4M was also an improvement.  COLT says they have not see a material change in performance trends since New Years, but they declined to give much in the way of guidance due to the economy – a familiar song this month.

Separately, COLT announced that it is seeking to raise about €200M by selling stock.  While their cash position at €273M is solid, their debt of €262.2M matures in December of 2009, hence the equity sale.  I’m sure they would rather have done it in a more favorable market, but in this environment I’m surprised they waited this long.

I have long thought that COLT would wind up in M&A somewhere along the line, their continent-wide deep metro penetration and 16,000 on-net buildings represent a unique asset that has long term value.  So far though it just hasn’t happened, and given the current conditions it seems unlikely for a while. But if they succeed in their equity sale and pay off their debt, they could be open to a stock M&A deal.

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Categories: Financials · Internet Backbones · Metro fiber