I have updated my competitive telecom trends pages with all Q1 data, and also adding Inteliquent to the list of companies tracked. Except for companies with significant short term news driving their numbers in some way, both EBITDA margins and EV/EBITDA were relatively stable during the quarter. Here's the current relative valuation chart:
Relative Valuation (EV/EBITDA) for Competitive Network Operators
Here the second to last data point for each series represents the end of the quarter, while the last data point updates the valuation based on yesterday's close with Q1 data for a real-time estimate. As you can see, there were two big movers since the beginning of the year. The obvious case is AboveNet, which jumped above the 9x plateau due to its pending acquisition by Zayo. This will probably be the last datapoint we get for AboveNet.
But more interesting perhaps is the fact that Cogent's relative valuation jumped even larger, which reflects the hit to the company's EBITDA from the MegaUpload fiasco and the fact that except for short term fluctuations the company's stock price did not suffer the consequences. To me this is an obvious flag that the market thinks Cogent is in play.
As for margins, here's the latest trend plot:
Adjusted EBITDA Margin for Competitive Network Operators
Existing trends mostly continued, with Zayo continuing to blast northward. Cogent's margins took a tumble that will probably bounce back in part next quarter as the company balances the revenue hit with some cost cutting. The newcomer to this chart, Inteliquent, saw its EBITDA margins grow slightly again following a few quarters of comperssion.
And Level 3 started to pick things up, beginning the march back toward its recent mid-twenties levels as the Global Crossing integration continues. Given the M&A/integration-related sharp shifts in the company's EBITDA and margins over the past two quarters, it's interesting that the stock price has matched the moves, keeping the overall relative valuation rather steady.
I put the relative capex trends plot into a post the other day looking at Infonetics' recent analysis. The relative revenue growth plot is still around, although with the M&A in the sector it is less useful than I'd like - still looking for a better way to look at that. As for the (EBITDA-Capex)/Revenue plot, the numbers were a bit less messy this quarter as there was a strange convergence to the range of 0.10-0.15 by most operators - I've no idea what that means.