Colt Reports, Economy Slowing Them Down

July 23rd, 2010 by · Leave a Comment

The economic overhang is greater right now over on the other side of the Atlantic, and it shows in the results of pan-European network operator Colt Group (LON:COLT, news).  Revenues for the first half were €794.2M, down from €817.4M last year.  For several years now, Colt has fought steadily declining voice revenues with increasing data and managed services revenues, but thus far in 2010 data revenues haven't grown, and in fact were down slightly from €398.4M to €396.8M.  Looking deeper, the weakness was rather specifically with the large enterprises, whereas data revenues for mid-sized enterprises and wholesale customers both advanced.  Managed services revenue was up strongly however, which is a good sign.

On the EBITDA front, Colt's first half was about the same as last year, checking in with €158.2M, up $0.2M from the prior year, as the company continues to hold the line on costs despite shrinking voice revenues.  That means EBITDA margins rose again, now touching the 20% mark.  Capital expenditures were higher too though, at €103.7, and since they seem to be in the process of doubling the footprint of their datacenter campus outside London, I expect it will stay that way for a few quarters.

All of this was largely expected, nobody was expecting fireworks and in fact the stock is up thus far in response.  But it does give us some idea of how US companies with European divisions will fare on that front when they report in coming weeks.  Going forward, the company sees "positive signs in the market which indicate an improvement in the second half and into 2011."  That's a good thing of course, but it's still very cautious.

Colt has some of Europe's most extensive competitive metro fiber, but the European market has lagged the US in its appreciation for such assets thus far.  One wonders when it will begin to tell.

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Categories: Financials · Internet Backbones · Metro fiber

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