Zayo Chalks Up Steady Growth In Its Fiscal Q4

September 13th, 2010 by · Leave a Comment

Regional metro and regional fiber operator Zayo Group has reported its results for its fiscal fourth quarter and full year ending on June 30, 2010.  They were very active in adding new buildings and especially towers to their network.  They added 162 structures to their network, of which 132 were towers and most of the rest were enterprise buildings.  They have over 500 more towers in the pipeline, so that sort of trend seems likely to continue.    Here is a quick tabular summary of their results in Q1.

$ in millions Fiscal Q3 Fiscal Q4
--Zayo Bandwidth 45.5 46.6
--Zayo Enterprise 8.8 9.3
--ZColo 6.9 7.1
--Zayo Fiber Solutions

0.0

0.0
Total Revenue 59.8 61.4
COS 19.5 19.8
Adj.EBITDA 21.4 22.8
Adj.EBITDA Margin 35.8% 37.1%
Capital Expenditures 16.9 21.6
On-Net Buildings 2256 2418
On-Net Towers 913 1045

Churn had been a bit higher than normal in the previous quarter, but that swung back the other way in this quarter and therefore they saw decent organic growth. Zayo Enterprise had a particularly strong quarter, I wonder if they can keep that up. EBITDA margin rose again, pushing through 37.1%.   The company's largest operating segment, Zayo Bandwidth, had EBITDA margins of 40%, while Zayo Enterprise Networks and zColo were at 19% and 37%, respectively.  I will be adding Zayo's overall metrics to my competitive telecom financial trends graphs now that we have a few datapoints.

Zayo began to report its quarterly results last quarter in accordance with requirements of its public debt, and the amount of data they provided was somewhat staggering.  This quarter is no different, and therefore to get the full view one must read the raw data.  In the coming fiscal Q1, they will have a full quarter's results from AGL, and they expect to close on the AFS purchase on October 1 so those results will fall in Q3.  Hence, the next few quarter's numbers will largely reflect inorganic growth.  Margins should rise, since both AGL and AFS are pure metro fiber operators with high EBITDA margins.

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Categories: Financials · Metro fiber

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