The last fiber-fed word on the quarter goes to Zayo, which started its fiscal 2013 with an even more complex mix of organic and inorganic activity. The AboveNet and FiberGate deals closed in Q3, US Carrier closed last month, and the new First Communications deal still has a few weeks left, which means following the numbers is a bit like taking a snapshot of a rail switchyard. But it was the organic burst of 709 on-net building additions that caught my eye this morning, the majority of which are surely of the tower variety of course. Here is a quick table of the numbers in context:
|$ in millions||Fiscal
|- Zayo Bandwidth||56.5||64.5||74.8||76.4||152.1|
|- Zayo Fiber Solutions||13.2||15.3||19.6||22.7||65.9|
|Adj. EBITDA Margin||48.4%||50.6%||51.3%||52.4%||53.4%|
Zayo has now officially joined the list of competitive metro fiber operators with greater than 10,000 on-net buildings (according to the Oct 3 list on their website), joining tw telecom, Level 3, the cable MSOs Cox and Time Warner, and Colt over in Europe. Comcast probably makes that list too, but I don't have the data. Zayo's 709 on-net buildings added this quarter exceeds even the rate that tw telecom has been putting up lately, although it's not on a sustained basis yet and we're talking about completely different types of buildings so it's not so directly comparable.
Zayo's revenue this quarter of $229.7 is hard to break down, as it includes not just inorganic contributions from Arialink, AboveNet and FiberGate, but the spinoff of Abovenet's professional services division to the company's shareholders since it was decided to be non-core. Zayo has done this with various pieces of the various companies it has acquired over the past five years in order to keep the focus on bandwidth. The CC presentation will no doubt have more information on the organic component of growth. With US Carrier and First Communications plus a little growth, it appears that Zayo will likely top $1B in run-rate annualized revenue next spring.
The overall loss of $51.6M during the quarter included a one time charge of $65M from the debt extinguishment that went along with the financing of the AboveNet deal. That means that going forward they're solidly in positive earnings territory. On the balance sheet, they finished the quarter with $214M in cash and $2.84B in long term debt. That puts their Debt/EBITDA above five for the moment after the AboveNet deal.
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