Over in Europe we have one more fiber network earnings report to look at. Now that its process of de-listing from Singapore is done and the company is private again, the company is nevertheless continuing to offer financial information on the its progress, albeit in somewhat less detail. Here are their numbers in some context:
|in millions of €, UOS||Q3/15||Q4/15||Q1/16||Q2/16||Q3/16||Q4/16|
|Normalized Adj EBITDA||8.9||9.8||9.9||11.1||11.0||11.7|
|Norm. Adj EBITDA margin||30.0%||32.0%||32.3%||34.5%||34.6%||36.2%|
|Proxy Cash Flow||(3.1)||(1.0)||(1.7)||(5.6)||(1.1)||(5.9)|
Revenue rebounded after a lower Q3 even as they de-emphasize legacy SDH products. Adjusted EBITDA edged slightly lower, but in its normalized form surged ahead – suggesting the noise in the data may shift back the other way soon.
Capex rose to 16.5M, the highest level at which I have seen it. This coincides with a series of large network buildout projects that euNetworks has in play. In 2016 they began adding longhaul routes to Stockholm, Marseilles, and Madrid as well as adding metro depth in Berlin and adding a new metro market in Manchester. At more than 50% of revenue, euNetworks’ organic expansion projects are a big part of the story. Being privately held gives them significantly more flexibility in their choices from here on out.
The company also took the opportunity to improve its balance sheet. They have amended their existing senior secured credit facility, taking it from EUR105M up to EUR175M, widening the group of banks involved, and extending the termination date to March 2022. The additional funds will go toward euNetworks’ expansion projects, both organic and inorganic.
The European fiber market has seen consolidation, but so far not nearly as much as we’ve seen in the US. There’s still the potential for more, and I expect there will be opportunities ahead for euNetworks to make such inorganic moves. Whether the company pulls the trigger again soon is anybody’s guess though.
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