Fiber-based Telecom Valuations – September 2009

September 23rd, 2009 by · 1 Comment

It has been several months since I last charted relative valuations in the sector, so it’s time to see what the summer has wrought on EV/EBITDA ratios for fiber-based telecoms.   Of course, we lost one name from my usual list when Fibernet Telecom Group was purchased by Zayo, but perhaps we can get it back someday if Zayo goes public.  But beyond that, have the early signs of a recovery made themselves evident via higher market valuations?  Here’s the chart:

Fiber Valuations - Sept 2009 - debt at mktThe range for September spanned 4 through 8, and the trend continues to be solidly upward, but for some more than others.  glbc and Cogent Communications (NASDAQ:CCOI, news, filings) had a nice summer, starting to get some respect from the street that they will need to back up with some solid numbers in the second half of the year.  Likewise,  Level 3 Communications (NYSE:LVLT, news, filings) saw a substantial gain, however it had to do as much with falling EBITDA estimates as it did with rising stock prices – the market clearly expects them to start turning that trend around.  The only company with a lower EV/EBITDA ratio since June was PAETEC (news, filings), but this is due to a May surge in their stock price that perhaps foreshadowed the higher EBITDA forecast based on the latest guidance.

As for the same chart using debt at par, things don’t look that different anymore, as much more of the bonds in this sector are trading close to par.

Fiber Valuations - Sept 2009, debt at parSo a recovery does seem to be in progress, at least amongst fiber based telecoms, although it is still a long way back to those times when EV/EBITDA ratios were often above 10.  Heck, I seem to recall Cogent’s being in the 20s.

If you haven't already, please take our Reader Survey! Just 3 questions to help us better understand who is reading Telecom Ramblings so we can serve you better!

Categories: CLEC · Financials

Join the Discussion!

1 Comment, Add Yours!

  • Dave Rusin says:

    FiberNet was not a dominant owner of metro fiber assets. More focused on co-location and interconnection amongst carriers who have such assets that pass through Hudson Street with a need to neutrally interconnect elsewhere.

Leave a Comment

You may Log In to post a comment, or fill in the form to post anonymously.

  • Ramblings’ Jobs

    Post a Job - Just $99/30days
  • Event Calendar