Business Services Now Make Up 3/4 of EarthLink

July 28th, 2011 by · Leave a Comment

In their earnings report this morning, Earthlink (NASDAQ:ELNK, news, filings) said that with a full quarter of One Communications adding to their earlier purchase of Deltacom and of course their New Edge division, business services now add up to 74% of the company's total revenue, which means we're really going to have to start thinking of the company as a network operator and CLEC rather than an ISP.    I still don't think their done assembling fiber and CLEC assets.  However there's no doubt they already have substantial scale, and the remaining legacy but still lucrative ISP business lets them start out with something other CLECs often find rather difficult to attain: cash flow and profits.

Total revenues were $363.5M, with adjusted EBITDA checking in at $88.9M, yielding an adjusted EBITDA margin of 24.5%.  I will be adding them to my competitive telecom trends data this quarter in some form.  Earthlink ended the quarter with $490.5M in cash and equivalents, meaning they certainly have the firepower to do more M&A from here should the right asset become available.  But they haven't yet moved on an obvious immediately available target, Broadview Networks, so perhaps they will finish the integration of their other purchases first.

Categories: CLEC · Financials · ISPs

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