Trans-European operator Interoute offered up some details about its 2009 financial results today. Privately held by the Sandoz family and Tecom out of Dubai, Interoute nevertheless offers us some valuable data points on the European bandwidth business. Revenues of €269M were up 9%, showing steady growth despite the continued difficult economic environment in Europe.
EBITDA rose to €40M, up 62% from last year. That puts their EBITDA margins at just under 15%, but rising quickly now that their business is achieving scale. They also apparently generated net cash surpluses in two of the last three quarters.
Looking forward, the company intends to use its improved cash generation to support both organic and inorganic network expansion. The company has taken its network to virtually every corner of Europe, but there is much depth yet to be added to that breadth. Yet they do seem to have ambitions both to the south and to the southeast as well.
If they pursue M&A, what might they buy? I suspect they will focus mostly on increasing the depth of their penetration in the eastern and southern markets they have expanded into over the past few years, and therefore they might be interested in some of the lesser known regional operators.
One major question though is how the latest financial turmoil centering on the Greek bailout will affect the bandwidth markets going forward. I don't really have a clear sense of it yet. FTTH and mobile broadband are advancing rapidly across the continent and that traffic is coming whatever the economy might hold, but the macro economic environment has to show up in the equation somewhere.
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