Telecom Ramblings

Happy Thanksgiving everyone!  Before you go, here’s a quick rundown of this week’s pre-holiday networking news.  There was more of it than usual for this short week:

TW Telecom (NASDAQ:TWTC, news, filings) is joining the expansion parade down in Atlanta with a major buildout to the suburbs north and east of the city.  The new loops will offer potential connectivity to more than 600 commercial buildings in Johns Creek, Suwanee, Duluth, Norcross, the Emory University area, Decatur and Tucker, and bring the company’s total Atlanta metro route mileage to 550.  Atlanta is hot lately, as [Read more →]

Finishing up this week’s look at comparative financial metrics for competitive fiber operators, let’s look at relative valuations via a plot of EV/EBITDA through the end of the third quarter.  Of course, since the end of Q3 several things have happened such as Earthlink’s purchase of Deltacom, a flurry of movement due to the Level3/Netflix deal, and XO’s proposed rights offering and optimistic guidance.  This graph uses EBITDA for the trailing twelve months harvested from regulatory filings, it does not use projections or guidance – and thus the EV/EBITDA ratios tend to be higher than analysis that does attempt to look forward.  Ok, enough talk, here’s the plot: [Read more →]

Metro fiber specialist abvt is kicking off the holiday season with a surprise $5/share special dividend, to be paid out on the Saturday after Christmas.  The total amount of the one time dividend will be approximately $129M, which is just about two thirds of the $195M the company has on the balance sheet.  Replacing that cash on the balance sheet and the company’s current credit facility will be a new five year $250M senior secured revolving credit facility.  This would seem to imply that AboveNet is quite [Read more →]

We haven’t heard too much from dark fiber startup Allied Fiber (news, filings) of late.  Back in May the company unveiled its rather startling five phase plan to build longhaul dark fiber nationwide, with the first phase connecting New York, Chicago, and Washington DC.  In an update today, Allied Fiber announced additional financing from ABRY Partners and Falcon Investment Advisors that will allow it to complete phase 1, which will cost roughly $140M in all.  The expected completion date is now [Read more →]

Following up on yesterday’s post on EBITDA margin trends through Q3/2010, here is a quick look at both relative revenue growth and capital expenditures as a percentage of revenue.  As always, the latest automatically updated version can be find on my Competitive Telecom Trends page, but in this post we try to take a snapshot and use better formatting.  In this case, we include the partial data for Zayo on the capex chart, but not yet on the revenue growth chart, as Zayo’s publicly available numbers don’t go back far enough and if even if they did they would be so skewed by M&A as to be useless for comparison.  With no further ado, here is the revenue chart going back to Q1/2008: [Read more →]

According to reports over in the UK, News Corp’s bid for the part of BSkyB it doesn’t already own has run into a bit of an ecclesiastical snag.  That’s right, if you thought it was difficult jumping through all those regulatory hoops for the FCC, a few dozen state PUCs, the Justice Department, and occasionally Homeland Security, then consider this.  The Church of England is now publicly objecting to the purchase, on the grounds that it would give Rupert Murdoch and crew a ‘potentially dominant’ position in the UK media sector.  Nigel McCulloch, also known as the Bishop of Manchester, is apparently leading the charge, and it actually seems to have a few teeth. [Read more →]

Ever since Sidera Networks emerged from ABRY Partner’s acquisition of RCN, it seemed likely that further moves were in the offing.  Today, Sidera unveiled another piece of the plan, announcing that it has acquired Cross Connect Solutions.  Cross Connect Solutions offers carrier neutral colocation in Philadelphia via a 28,000 square foot facility at 401 North Broad Street, a site that is [Read more →]

I have updated the data underlying my competitive telecom trends resource to include all available Q3 data for US-based competitive service providers.  While the automatically generated charts are always there for you to peruse, I will take a closer look at each in turn with some better formatting as I did last quarter.  First let’s look at trends in EBITDA margin across the sector.  We no longer have new data from RCN Metro (now Sidera Networks and privately held) but we do have enough partial data from Zayo to add in.  Here’s the chart: [Read more →]

A little over a week after Cisco Systems (NASDAQ:CSCO, news, filings) disappointed Wall Street by announcing that revenue growth wasn’t going to justify that family vacation this winter, the company is taking steps to make up and renew its marriage with investors and the media.  But what can make up for a 20% hit to the stock price of a tech giant?  First there was the obligatory “I’m sorry” from CEO John Chambers, who said the other day at the company’s annual meeting,  “We won’t surprise you very often, and I apologize that we did.” And just in case words weren’t enough to heal the wound, Cisco brought out the heavy guns and announced an addition of $10B to its stock buyback program.  That must be the box of [Read more →]

T-Systems, the international services arm of Deutsche Telecom AG (ETR:DTE, news, filings), is expanding its services contract with Global Crossing down in Brazil.  In addition to the private LAN, IP, and clear channel services that T-Systems has been buying from Global Crossing since 2003, they will now be leasing some 34Gbps in wavelength capacity.  It will be used to link T-Systems’ three data centers in São Bernardo do Campo, São Paulo and Barueri as part of an enhancement to [Read more →]

When one talks of a reverse split amongst competitive carriers, the subject is usually Level 3, since they have retained the explicit right to do so ‘just in case’ for many years now.  But today in S-1 and PRE-14C SEC filings, XO Holdings (news, filings) unveiled its own plans for a one for twenty reverse split aimed at getting its common stock back on the Nasdaq Global Markets by raising its price above the $4 initial listing threshold.  Such a listing has been a point of contention amongst investors ever since Icahn took the company out of bankruptcy court. So why now?   [Read more →]

The Social Security administration has selected AT&T (NYSE:T, news, filings) to develop a new contact call center solution under the Networx Universal program.  The contract, which is worth up to $286M, will power the IP based call center and interactive voice response automation underlying the SSA’s national toll free number.   [Read more →]

Let’s quickly catch up on some of the news this week:

Prospective wholesale LTE alternative network LightSquared (news) took a major step along the path toward actually having a network.  For now, it’s just a really big satellite that was launched from Kazakhstan on Sunday.  And by really big, I mean with a 22 meter L-band reflector-based antenna.  The idea, or so I gather, is that by having bigger equipment in space, [Read more →]

According to a PR yesterday, abvt is adding new express routes to its fiber network in the Chicago metro area.  The new routes will bypass more than 23 miles of the existing fiber footprint on the way to Chicago’s western suburbs, and thus will provide a lower latency route for financial customers and others seeking greater speed.  The new Chicago routes will be operational by [Read more →]

According to a release from Telegeography today, IP transit pricing continued its fall but with no real change to current trends.  The median price for a GigE port in New York fell to below $8 per Mbps by the end of the second quarter of 2010, with London following closely. In Hong Kong, pricing for the same port fell to $28, with Tokyo a bit higher now.  That pricing for a GigE port has fallen at a 15% compounded rate over the past five years should surprise [Read more →]

As they do each quarter, both XO Holdings (news, filings) and itcd have filed their 10-Q’s with the SEC for the third quarter on the last day possible, bringing earnings season to a close for the telecom and internet infrastructure sectors.  Neither company offered up any surprises bigger than the news each made in October, when Deltacom announced its expected acquisition by Earthlink and XO pre-announced guidance, some money from Icahn, and plans for a $200M rights offering.  However, let’s take a look at the details.  Here are XO’s Q3 numbers and remaining guidance in the context of the prior four quarters: [Read more →]

Competitive network operator PAETEC (news, filings) is accessing the credit markets in order to fund the acquisition of Cavalier that was announced two months ago.   The nationwide CLEC announced today that it intends to sell $420M in senior notes due 2018, and that the transaction should be completed this week.  The new funds plus some already on the balance sheet will be used to fund the $460M purchase price, including the [Read more →]

International wholesale IP and Ethernet carrier tinet and the Middle Eastern cable system Gulf Bridge International (GBI) announced a partnership this morning.  Tinet gains connectivity to the major ports in the Middle East and on to southern Asia, routes which the company has not previously had a big presence.  Meanwhile, GBI gains easier access to the rest of the world via capacity and services on Tinet’s global network, especially into Europe.  As the two are not likely to [Read more →]

Rising competitive fiber operator Zayo Group (news, filings) reported its fiscal Q1 earnings yesterday in the wake of Zayo Bandwidth COO John Scarano’s recently announced departure.  There were few surprises but a bit of more accurate information on the AFS deal.  Because of Zayo’s frequent M&A activity, it is always rather difficult to find an apples to apples comparison.  In this case though, Q1 included a full quarter from the former AGL Networks, whose acquisition closed on July 1 and whose revenues all went toward the ZFS segment along with $1.4M of dark fiber revenue transferred from Zayo Bandwidth.  With that in mind, here’s a quick table summarizing their performance alongside the prior quarter: [Read more →]

TGIF, let’s close out the week with a quick look at a few more recent items:

Emphasizing the importance of power availability nowadays, Digital Realty Trust (NYSE:DLR, news, filings) today deeded over a parcel of land in its Santa Clara Datacenter Park to Silicon Valley Power.  The utility will build a 65MW general distribution substation, apparently named [Read more →]

Two companies that haven’t really been on my radar made M&A news yesterday.  pmug will be buying arbx in an all stock transaction valued at about $28M.  The purchase will add some $300M+ in annual revenues to Primus’s $800M, bringing their total annual revenues to above $1B and that of their wholesale division to more than [Read more →]

Not willing to be forgotten the Netflix/Level 3/Akamai story, Limelight Networks (NASDAQ:LLNW, news, filings) has also spoken up today.  In a post on their corporate blog, the company noted that there also “a primary CDN provider” for Netflix (NASDAQ:NFLX, news, filings), the deal is also a multi-year one that expands in 2011, and they are already storing all 20,000 titles.  Thus, while the information we have is surely incomplete, it does seem to suggest parity between the Level 3 and Limelight contributions toward Netflix’s streaming services in 2011.  Of course, Limelight and Level 3 are very different [Read more →]

It’s a bit anti-climactic now of course, since the news came out on Tuesday already and caused quite a ruckus for the stock prices of the three content delivery networks involved.  But this morning Level 3 Communications (NYSE:LVLT, news, filings) and Netflix (NASDAQ:NFLX, news, filings) made it official, and offered a few more details on the multi-year contract.  One thing to note is that the PR names Level 3 as ‘primary’ CDN provider for Netflix, which suggests that they may get a bigger share of this than Limelight Networks (NASDAQ:LLNW, news, filings) does and certainly have displaced [Read more →]