TW Telecom Still In the Zone

August 11th, 2009 by · 2 Comments

National metro fiber and data services provider TW Telecom (NASDAQ:TWTC, news, filings) announced earnings today, once again demonstrating both the steady growth and operational streamlining we almost take for granted now.  Revenues grew 1.2% sequentially to $301.1M from $297.6M in the prior quarter.  As usual, growth came almost entirely from Data and Internet services, while Network and Voice services just held on.  The company discussed elevated churn levels just as frankly as they always do, especially amongst smaller customers.  But when they talk of a headwind slowing them down, they continue to make solid progress against it nevertheless.

EBITDA of $108.9M was up from $104.4M in the prior quarter, a larger increase than that of revenue both in percentage and gross terms.  The company continues to drive costs out of its business, as promised.  EBITDA margin grew to 36.2%, continuing to march toward 40%.  While we saw abvt put up another 40%+ EBITDA margin, we should remember that TW Telecom is something more than a pure metro provider - they sell voice products and managed services, and therefore have differing economics that aren't as directly comparable.  Earnings per share of $0.04 were perhaps a penny better than expected according to estimates collected by Yahoo! Finance.

The company added 249 on-net buildings during the quarter, again thumbing its nose at the capex crunch by spending $69.2M on its network.  That figure is down slightly from last quarter's $73.4M, but not by much. Free cash flow of $23.6M was strong as usual.  It must be nice to generate enough cash to do what you want with it.  I still can't help but wonder when TW Telecom will make another M&A move.  It takes so long to scale the business organically, and they clearly have as good a handle on how to operate fiber assets as anyone.  I still think they could do much more with XO's assets than Icahn has been able to, but it is clear now that Icahn himself is the hurdle to a deal there.

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Categories: CLEC · Financials · Metro fiber

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