Telecom Ramblings

The 2010 M&A season continues to heat up.  Today Covad and Megapath exchanged vows, planning to merge their respective networks and produt offerings.  Platinum Equity took Covad private a couple years ago, and since then the company has been further retooled from a reseller of consumer DSL into a managed services provider targeting the SME and wholesale segments with MPLS, VPN, and Ethernet products.  This merger will take them further along that path by adding additional managed products and deepening the overall footprint.  The combined company will reach some [Read more →]

Several bits of news came across the wires in the past few days in the CDN sector that were worth a look.  First of all, Dan Rayburn reported that both Level 3 and Limelight seem to have peeled off some of the Hulu traffic that has pretty much all belonged to Akamai (NASDAQ:AKAM, news, filings) until now.  As Dan says, in this case it probably isn’t a pricing thing but rather a diversity thing.  As Hulu grows, they naturally will seek the flexibility of having multiple providers, which they can then play off against one another later on when it *is* [Read more →]

GigaOm tracked down a very interesting new development in mobile broadband.  It seems that Harbinger Capital Partners is planning a major LTE Move via SkyTerra and a large assorted pile of satellite and terrestrial spectrum, with additional involvement possible from Terrestar which it also owns a chunk of.  The idea seems to be to build out terrestrial LTE networks in urban areas and serve rural areas with LTE via satellite, with the whole network offered on a wholesale basis.  The FCC seems to be relaxing restrictions on the spectrum usage in exchange for [Read more →]

The first round of stimulus funding went mostly to local communities and smaller regional providers and for projects usually in the tens of millions of dollars.  But the second round is shaping up rather differently, as the larger ILECs arrive with bids an order of magnitude higher.  Last week it was q reversing course and applying for a big chunk.  Today it was the large, mostly rural ILEC Windstream (NYSE:WIN, news, filings) who turned up with their own rather large bid. [Read more →]

Pan-European network operator Interoute announced today that it has extended its network into Istanbul, Turkey.  That’s as far to the southeast as it can go without actually leaving Europe, at which time I’ll have to find another adjective since Pan-European would no longer suffice.  Strategically, Turkey was perhaps the most critical crossroads in the western world for millennia.  But that has yet to translate into [Read more →]

Northeastern regional fiber operator Lightower announced a further expansion of its footprint yesterday.  The company will be adding routes to the north and east of New York City.  In Westchester county they will be entering the White Plains, Purchase, Elmsford, Hawthorne, Briarcliff Manor, and Yonkers markets, amongst others.  And over the border in [Read more →]

Following the AGL deal, it appears that indeed the M&A market for fiber is going to continue heating up.  The latest news comes from Rochester, where northeastern metro operator Fibertech has now quite publicly put itself up for sale.  I had heard whispers that this move was coming, but hadn’t realized plans had advanced this far.  The driver is simply that Fibertech’s largest backer, Nautic (51%), wants to monetize the asset.  Interestingly though I hear that the other backer, Bank of America (49%), does *not* [Read more →]

Competitive service provider XO Holdings (news, filings) has launched 40G services nationwide.  They are now offering both 40G transport links and 40G IP transit links, seeking to better address rising demands for ultra high-bandwidth and low latency network connectivity in the wholesale and large enterprise space.  XO’s intercity backbone consists mainly of fiber IRUs from Level 3, and is lit with Infinera gear.  Since Infinera’s native 40G wavelength products aren’t out yet, [Read more →]

As expected, WiMAX upstart clwr has officially launched its CLEAR 4G in the greater Houston area.  This rollout covers more raw territory than any of the company’s efforts so far, bringing online over 1900 square miles and potentially reaching some 4 million people.  That includes the Lake Jackson area as well as the main regions, the overall map looks like this: [Read more →]

Following up on our look into revenue, ebitda margin, and capex financial trends across a selection of fiber-based telecoms, it is time to examine our last metric which will complete the set:  EBITDA less capex as a percentage of revenue.  It doesn’t have a formal name or at least a common one anyway, but I think of it as an unleveraged free cash flow margin that neglects working capital swings.  What does it tell us?  Let’s look at the graph first: [Read more →]

Following up on my updates to revenue and EBITDA margin trends for competitive telecoms, here is a look at capital expenditures as a percentage of revenue.  Whereas the metro fiber specialists tend to have high margins, they also have high rates of capex.  At least they do if they are growing that business…  Here is the chart for the same group of companies: [Read more →]

Southern regional CLEC itcd announced today that it would raise $325M in senior notes due 2016.  They quickly priced them at 10.50%, and expect to finish the transaction this week.  They will use the funds primarily to refinance their current credit facilities.  If all this sounds familiar, it’s because it is. [Read more →]

q has chosen to participate in round 2 of the broadband stimulus bake sale, and they aren’t thinking small.  As everyone knows, the ILEC’s home turf covers a large amount of the country’s sparsely populated territory and therefore has more than its fair share of under-served areas.  So when Qwest finally chose to seek stimulus funding, they quickly came up with quite a list of communities across their territory. [Read more →]

That’s how it seemed anyway, yesterday.  In a blizzard of press releases, Verizon (NYSE:VZ, news, filings) Wireless announced a small army of companies that will be helping roll out their 4G LTE network over the next year or two.  First of all, they will be using gear from Alcatel-Lucent (NYSE:ALU, news, filings) for backhaul, which is a significant win for the equipment giant – they will apparently be the only provider involved end to end.  And then the company announced its backhaul partners outside of its home turf in the northeast.  [Read more →]

You heard it here first ten days ago, and rumor has indeed become reality.  Zayo Group has in fact agreed to purchase AGL Networks, the metro fiber arm of energy utility AGL Resources.  After the purchase closes in the next 60-120 days, Zayo will take possession of the metro assets in and around three markets:   Atlanta, Phoenix, and Charlotte.  Financial information for the deal was not provided, but multiple sources peg the deal at roughly [Read more →]

Following up on yesterday’s look at revenue trends over the past 8 quarters amongst competitive telecoms of all stripes, let’s take a look at EBITDA margins.  EBITDA margins give us an idea of each business’s ability to turn revenue into cash, but of course it doesn’t account for cash spent on capital expenditures.  Thus, business models with a heavy fiber bias tend toward the top, while fiber-light business models tend toward the bottom.   With no further ado: [Read more →]

An article over on ArsTechnica caught my eye this morning – a 1Gbps last mile fiber project in eastern Cleveland being spearheaded by Case Western Reserve University, which itself is almost an island amidst one of the most desperately poor sections of town.  It’s one I know well, as the school happens to be my alma mater – I spent four years there carefully not stepping off campus on my way to an engineering degree.  CWRU is taking its own fiber network, which has always been ahead of its time, and extending it off campus to those who basically have no access at all. [Read more →]

Several interesting networking contracts have come across the wires this week already, here’s a quick look.

XO Holdings (news, filings) has deployed a nationwide voice and data solution for Kawasaki Motors.  The fully managed MPLS wide area network will hook up headquarters, sales offices, distribution and manufacturing facilities across five states, cutting overall voice and networking costs by some 40%.  Which 5 states?  A little legwork tells me [Read more →]

It seemed like the winter was dominated by LTE news and plans, while WiMAX took a back seat.  But today with the first week of Spring, clwr and Sprint Nextel (NYSE:S, news, filings) struck back with a one two punch that was very powerful even if it was largely anticipated.  Clearwire added a bundle of new major cities that will see WiMAX deployments this year:  Los Angeles, Miami, St. Louis, Cincinnati, Cleveland, Pittsburgh, and Salt Lake City.  Next in line of course is [Read more →]

Possibly the most surprising CDN acquisition last year was the purchase of Velocix by Alcatel-Lucent (NYSE:ALU, news, filings).  Just what exactly the telecommunications equipment giant intended to do in the CDN space was unclear.  As interesting as content delivery is right now, revenue-wise the whole sector can fit in their back pocket and still leave room for a cell phone.  Today though, Alcatel-Lucent announced its Multimedia Solutions initiative, the largest part of which was of course built on Velocix. [Read more →]

I was going to wait to update my series of comparative metrics (revenue growth trends, EBITDA margin, Capex, etc) this until XO Holdings (news, filings) reported earnings, but they’re later than usual and there seems to be no ETA.  When they do report, I will try to update the graphics.  I do realize that Murphy’s Law says it will be 10 minutes after I post this…  So, now that everyone else has reported, let’s take a look at relative revenue trends across the sector over the past 8 quarters.  The companies (or parts of companies) all offer various combinations of voice, data, and raw bandwidth in competition with the ILECs primarily to the US wholesale and enterprise markets.  As a rule, they have little or no consumer focus.  With no further ado: [Read more →]

For Infinera (NASDAQ:INFN, news, filings), OFC/NFOEC 2010 is always one of the bigger events of the year and they can always be counted on to demonstrate their latest progress – though perhaps not necessarily to drive an 18 wheeler onto the show floor in the process.  This time, unsurprisingly, they were focused strongly on 100 Gigabit Ethernet, and they showed a 100 GigE transmission over their current DTN gear using a prototype 100 GigE tributary interface module.  It should be noted of course that Infinera’s 100G is a different beast [Read more →]

RCN Metro, a division of RCN Business (NASDAQ:RCNI, news, filings), is extending its footprint into Canada.  The northeastern metro fiber operator will enter the Toronto market, with a basket of low latency Ethernet services formally scheduled to be available for sale at the end of May.    Looming large of course is the current buyout offer for the parent company RCN by ABRY, and any competing offers – but RCN Metro has continued about its business with both these Canadian plans and the success of [Read more →]