For the third profile in this series, Telecom Ramblings looks at Hibernia Atlantic. The company opened its doors under the wing of Columbia Ventures six years ago with one asset: a shiny new transatlantic cable completed by 360Networks before its implosion. That cable had a uniquely diverse northern route, but was still practically empty at the time and the transatlantic bandwidth market was in shambles. For many, they fell off the radar screen or were just never on it. Now as we close the decade, they have driven revenues toward the range of $60-70M in 2009 and will be pushing on toward $100M soon thereafter, and they have quietly carved out a nice position in the market.
Hibernia has taken a creative path that has led to a footprint unlike that of any carrier I know. They have melded together a collection of dark fiber rings from a couple dozen IRUs, and have assembled an extensive, combined metro and regional footprint on either side of the Atlantic to feed into the transatlantic cables. They haven't lit it all yet either, they have fiber ready to roll all the way to Seattle and California given the right conditions. And they aren't afraid to get their hands dirty either; they are building a brand new regional network connecting Belfast and Dublin both by land and sea this year. While it remains their central asset, it is becoming harder and harder to characterize Hibernia Atlantic as merely a transatlantic cable.
Their market is primarily a wholesale one, serving carriers with needs for independent and diverse transatlantic bandwidth. That will certainly remain their focus, as the combination of traffic growth and stable pricing have made that a good place to be lately. But they have found an additional niche in the financial sector, where many customers are attracted by the physical route diversity and are increasingly willing to buy wholesale from a specialist like Hibernia. Such customers represent some 12% of Hibernia's revenues and that is growing quickly. And they are increasingly targeting the content sector as well, as shown by their recent deal with MediaXstream, tapping into another group of enterprise customers with big and growing bandwidth needs.
So where does Hibernia Atlantic go from here? Between their projects in Northern Ireland and dark fiber in the US, I think they will have no trouble keeping busy. Followers of this site know I always have M&A in mind, but in this case it seems unlikely in either direction. They don't need to sell and therefore aren't likely to do so at today's valuations, and it isn't clear to me what they could buy that would fit well. The action is likely to be more about equipment upgrades. We may start seeing commercial rollouts of transoceanic 40G in the next year or two, and just how that happens could affect the economics of the sector. I personally have no doubt that it will happen, but timing is everything. If it arrives early then pricing goes down, and if it arrives late then pricing goes up. If it is really late, we could even see a new cable built. Given that their own system has plenty of capacity left to sell, Hibernia probably prefers that commercial viability of transatlantic 40G hold off for a year or two.
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