Telecom Ramblings

[TheJuice blogs about his financial models and projections for telecom companies, most frequently about Level 3 Communications. Do you want a turn at the microphone? Contact the webmaster]

Hello all.  I thought due to the recent LVLT debt activity it would be a good time to update my valuation metric.  As you can see the debt has moved up BIG TIME, from .70 cents on the dollar to .90!  Wow. [Read more →]

Over the weekend, Hibernia Atlantic completed phase 1 of a new extension of its transatlantic cable to Northern Ireland, bringing the new cable ashore in a beach in Portrush.  The new system, called Project Kelvin, will connect eight cities in Northern Ireland, and five more in Ireland itself on the way to Dublin.  In the world of high technology, the island’s profile has grown as much as anyone’s in the last decade.  But when it comes to bandwidth, everything always has always gone through England first.  With direct connectivity to Hibernia Atlantic’s transatlantic cable, the island will have substantially more options for managing its bandwidth to the rest of the world. [Read more →]

The financial wizards in Broomfield have been busy lately.  In a press release today, lvlt announced yet another series of balance sheet moves.  It’s always a bit dizzying to read one of these PRs, but it all boils down to this.

1. They made a deal with an institution that held some $282M of their convertibles due in 2010, exchanging $200M in new converts plus $78M in cash.
2. They have also been very busy in the debt markets lately, and have repurchased some $248M in debt due over the next few years at various discounts for $223M.

What does that mean in the short term?  Mainly that Level 3 has made further progress toward lowering the hurdles it has to jump if the debt markets remain stingy for a long time.   The new maturity profile: [Read more →]

European alternative backbone colt announced today the selection and deployment of DWDM  gear from infn on its intercity network.  The gear is already live in eight countries:  Belgium, France, Germany,  Italy, The Netherlands, Spain, Switzerland, and the UK.  The speed of that roll out parallels others who have chosen Infinera gear.  Actually, it seems like it gets faster every year as the industry gets more and more comfortable with PICs.  [Read more →]

Well, they’ve finally given up all pretense of restructuring Nortel.  Late Friday the company announced that it would sell its CDMA and LTE infrastructure business to Nokia Siemens  for $650M.  The company has also expressed confidence that they can sell the other business units quickly, as in ‘weeks or months’.  So now the bidding war officially begins.  It may be an ‘orderly sale’, but nevertheless everything must go.  That would include the GSM wireless, enterprise networking, and metro Ethernet units, amongst other bits and pieces.  Who will buy them?  With the credit markets apparently thawing a bit, the list of potential buyers is probably longer than it was a month or two ago.  The telecom equipment sector has been battered in this slowdown with revenues taking big hits, but many [Read more →]

So it looks like Google Voice will be publicly available soon.  Reports have it that they have reserved 1M phone numbers with voip wholesaler lvlt, and there’s no reason to do that unless you’re planning to cut the ribbon and open the doors.  However, I’m still trying to figure out what effects Google’s expected launch of this product will have on the market:

[poll id=”26″]

The idea behind Google Voice is to add [Read more →]

Over on Disruptive Wireless, Dean Bubley wrote an interesting piece on the early stages of a trend that has some wireless providers offering services to other operator’s customers, i.e. going over the top.  vod, for instance, has been pushing an iPhone app that works whether your phone uses their network or not.  Well, calling it a trend is probably premature.  If history is any guide, Vodafone and any others dabbling like this will quickly give it up. [Read more →]

Hewlett Packard and alu announced today that they have formed a ten year global alliance.  They hope to offer coordinated solutions that incorporate both IT and communications components to corporate customers and services providers alike.  The general idea here is not particularly new.  Networks and connectivity are as critical to the infrastructure of most companies today as the various IT hardware they use, and all are increasingly interrelated.  [Read more →]

In an SEC filing today, lvlt announced a major new contract with a ‘major multinational customer’ whose name they can’t tell us.  The contract, apparently signed June 4, has a 20 year term and a minimum commitment of $140M in the first four years – that’s pretty substantial as contracts go.  In the hours since the filing, I have been peppered with emails asking for comment on a) who it might be, and b) what it might be for.  Now, I have no inside information on the subject, but since I’ve never let that slow me down before here are some brief thoughts: [Read more →]

Two months ago, Credit Suisse came out with analysis claiming that YouTube was losing some $470M annually.  This led to headlines that YouTube was doomed, that all user-produced video sites were doomed, etc.  Some in the IP/Data community objected to the assumptions, including myself in this post.  But now in a new whitepaper, RampRate has taken those objections and put them into a more realistic model for YouTube’s cost structure.  [Read more →]

Competitive telecommunications provider XO Communications today announced it has made Laura Thomas its new Chief Financial Officer.    This is an internal promotion, Ms. Thomas has been a VP of Finance for many years, stretching back into the pre-bankruptcy days.  She replaces Gregory Freiberg, who left the company in April to take up the CFO role at Savvis.  XO acted quickly and did not bother with much of a search for outside talent, but that isn’t really a big surprise.  Given the current strategic environment, one has to wonder how long XO will remain independent and outside talent would probably require a rather golden parachute.  Besides, being CFO at XO isn’t exactly [Read more →]

Today paet announced plans to sell some $350M in senior secured notes, and will use it to pay off part of its credit facility.  They are looking to take advantage of the window in the credit markets this summer, an opening that haw been widening by the week.  Two weeks ago, PAETEC negotiated a change to its credit agreement allowing it to buy back up to $100M in the market below par and loosened the covenants such that they could sell senior secured notes.  Apparently they meant business!  I don’t know how many of the notes they managed to buy back below par, but with an additional $350M they should be able to [Read more →]

Last week, comments by CEO John Legere of glbc  about M&A in the telecom sector were all but drowned out by the Sprint/Level3 joint venture rumor.  Certainly I let them pass at first, if only because they echoed earlier comments of his from several months ago.  It certainly does seem that the whole sector is available to talk consolidation right now, if unable to actually do anything about it.  But Legere did mention one rather intriguing option for his own company that I hadn’t put any thought into:  svvs.  [Read more →]

llnw today unveiled IPv6 support for its CDN. Moves toward IPv6 have been gaining momentum lately, especially for those providing substantial services in markets outside North America.  ntt and glbc are particularly fierce about it.  Given that Global Crossing is reselling Limelight and also supplying it with underlying transport and transit, it is likely that they are involved [Read more →]

As promised, over the past two weeks I have updated my metro fiber provider list.  In my earlier note, I mentioned trying to get some European data.  I’m still trying, but haven’t managed to add anything at this time.  As usual, the latest list is here, which you can get to via the Resources item in the menu bar above.  Several new providers have been added to the list – new to the list of course, each has been around longer than this site has. [Read more →]

There has been something of a large network M&A rumorfest in the markets this week, but in the background everyone else just kept on going with normal business.  And metro fiber had a pretty good week, especially considering the relative paucity of PRs this quarter with actual contract wins.

twtc announced an Ethernet-based voice and data network deal at the Kansas City Star covering 10 sites.  The key to winning the deal was [Read more →]

If you want a preview of what battles over net neutrality in the USA may evolve into, you need only look at the UK.  In a Financial Times article, bt complains loudly about the demands caused by rising video usage.  As usual, thinkbroadband has good material on the subject.  While the BBC’s iPlayer is the primary ‘culprit’, pretty much all sites specializing in video are now being deemed freeloaders.  BT wants them to pay for the extra costs, assessing some sort of licensing fee to deliver content to its customers.  What a mess that would be. [Read more →]

With the new M&A buzz being the possible JV between lvlt and s, there will come a whole lot of articles which spread the rumor but don’t delve into the nitty gritty.  In fact, some will surely compare apples to oranges, and not realize it.  Therefore, I thought it might be useful to take both companies’ operational performance and put them side by side in as close to an apples to apples comparison we can manage.  It cannot be perfect of course, but we can get pretty close just by following the following guidelines: [Read more →]

According to the Wall Street Journal, s and lvlt are in early stage talks about a joint venture.  The WSJ has been rather noisy in the telecom merger area lately, most of the main ‘Qwest is selling its longhaul network’ stories originated there as well.  The Sprint/Level3 talks are supposedly at a very early stage, but Sprint’s idea here is obviously to pull a Clearwire.  They want to take a division they are not willing to keep investing in, and fold it into part ownership of a new company that can and will invest in it.  [Read more →]

Lightwave has a nice article on recent comments by vz and t to the FCC about what should make up our national broadband plan, i.e. how to spend the stimulus and promote broadband penetration.  I recommend a read.  However, it can be hard to read such policy statements without having an allergic response to the extremely high levels of buzzword density.  Therefore, I’m going to offer a bit of, err, translation.  Here the 8 elements AT&T offers as central to the right plan: [Read more →]

Ten years from now, will former Ed Whitacre have a resume that includes the reconstruction of the power and prestige an American icon, and also briefly ran a doomed car company in Detroit?  Or will he be two for two?  Readers of Telecom Ramblings know him as well as any group, so what do you think:

[poll id=”25″]

As a fan of competitive telecom I wish Whitacre hadn’t done [Read more →]

Apparently the thawing in the credit markets has now calved an iceberg or two.  Yesterday, eqix announced they would sell $250M in convertible debt, and just twenty four hours later have raised that to $325M at 4.75% at a strike price of $84.32.  I wouldn’t call it cheap money, at least not relative to a few years ago, but it isn’t bad.  Equinix will use the cash to expand its footprint to meet demand, but didn’t give any details yet.  Interestingly, they also entered into a capped call arrangement designed to reduce dilution, something vaguely similar to the bond hedge Level 3 had with Merril Lynch.  [Read more →]

Not content with sending extra personnel and equipment into the wilds of upstate New York and southern Texas, lvlt announced today that it is lighting fiber in Poland on a new route From Berlin, to Poznan, and on through to Warsaw.  Level 3 has had a PoP in Warsaw for a couple years now.  But while they lit fiber to Vienna, Bratislava, Budapest, and Prague, the route to Warsaw they continued to serve via wavelengths.  With the new fiber route comes a larger relationship with Polish cable provider Vectra, and it gets them closer to Russia where a whole lot of its IP transit growth has been coming from lately. [Read more →]