International IP solutions provider glbc found itself some substantial growth in the second quarter. Revenues advanced in all three of their geographical segments, partly buoyed by $9M in termination revenues and some favorable currency fluctuations. Backing those out, they seem to have met or slightly beat market estimates (and my own) for invest and grow revenues. Here's a quick summary of the company's performance in context:
|$ in millions||Q2/10||Q3/10||Q4/10||Q1/11||Q2/11|
|- GC Impsat||134||145||151||148||163|
|- Intersegment Eliminations||(6)||(6)||(12)||(8)||(6)|
|Total Invest & Grow||555||568||602||587||622|
|- Wholesale Voice||74||79||81||74||69|
|- Cost of Revenue||431||440||452||456||468|
|Free Cash Flow||(13)||(1)||102||(93)||10|
|Capex & Capital Leases||63||43||64||52||59|
Revenues: As usual, the strongest segment was Latin America, where their GC Impsat division managed an impressive 7% sequential growth in constant currency terms. The Rest-of-world numbers were boosted by that $9M in termination revenues - most in the USA with a bit from continental Europe, but even after that saw 3-4% growth beyond those currency effects. In constant currency terms, the UK was the only decliner - the company continues to face some pricing pressure there which is holding back growth. The company's wholesale voice business, which they run for margin rather than growth, shrank a bit to $69M.
Costs & OIBDA: OIBDA of $96M included favorable effects from those termination revenues that were offset by higher bonuses and fees related to the Level 3 transaction tha contributed to a higher SG&A. OIBDA margins of 13.9% were about normal for the company, though of course higher would be better.
Capex and Cash Flows: Capex levels of $59M for the quarter were inline with expectations, as was the $10M in positive free cash flow. With the Level 3 deal pending I expect they have kept and will keep a tight rein on both.
Final Thoughts: Global Crossing had a solid Q2 that won't do it or the Level 3 deal any damage. They aren't saying much on the regulatory front about the DOJ's second request and all that, beyond reaffirming their expectations for a close by the end of the year.
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