Since earnings season has officially ended, it is time for my quarterly look at EBITDA margin trends across the whole range of fiber networking companies. I don’t use the word CLECs because some of these companies don’t like to think of themselves that way, and frankly the term means less to me than it once did. The range is all the way from the pure fiber players, to the nearly fiberless – but all of whom specialize in connectivity and compete against the ILECs. With no further ado, here is the current state of sector margins:
As always, at the top we have the pure (or nearly so) metro fiber companies of Abovenet and TW Telecom which have been consolidating their ebitda margins while continuing to pump cash back into their businesses for expansion. RCN Metro has continued to rise toward that upper range, and is now pushing 35% also. If they were public, other fiber-rich companies like AFS, Zayo, and Fiberlight would all be in this range as well.
The metro-fiber-light grouping of CBeyond, Global Crossing, Paetec, and ITC Deltacom kept their slight uptrend intact. And in the middle Cogent, Sprint, and Level 3 each fell back slightly although not much relative to each other. The enigmatic XO continues to hold that bottom slot despite their extensive metro footprint, but has been gaining on the field lately. A fluctuation or a shifting of the tide? We shall see. Or at least we will if Carl Icahn doesn’t find another means to take them private over the winter.
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Categories: CLEC · Financials · Metro fiber
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Rob,
I suggest you create another chart that is EBITDA – CAPEX. The capitalization policies of these companies are wildly different and should be normalized for cash consumed on CapEx
Raul, I’ll give that a shot and see what it tells us. I suspect that we will need to throw up the relative revenue chart as well, since some capex is to keep the lights on and some is to grow faster. Perhaps all three together will give us the clearest picture.
Rob, not to add to your spreadsheets, but have you charted FCF which would include ability to service debt.