Yesterday, TelephonyOnline had a great article on the growing gap between those CLECs handling the recession well and those still suffering. Upon reading it, I wished I had a visual aid showing how each company’s revenue has progressed over the last year or two so I could get a better idea of the recession’s relative impact on the sector. There is a tendency by many (myself included) to depend on the words used to characterize each company’s performance moreso than the actual data, and so I like to keep grounded now and then. So I went out and collected the information and produced this chart of relative growth trends since Q1/2008:
Now of course revenue isn’t everything, that’s what profits are for and in a later post I will look at EBITDA trends as a window into that. But from revenue trends we can still get a sense of both who is pushing growth, who is backpedaling, where the economy has hurt, and where it hasn’t.
The biggest feature on the upside is the huge Q4/08 for abvt and the sequential drop in Q1/09, I think however that Q4 was simply an outlier and that the lower Q1 and Q2 numbers follow their earlier trend more accurately. Taking that into account, their revenue growth trend has been largely unperturbed, much as RCN Metro’s and TW Telecom’s – the three of which – [edit: AFS added also to this group] are the most metro fiber oriented of the public companies in the sector. Somewhat surprisingly, XO Holdings (news, filings) has also seen little damage to sales trends from the recession. Cogent Communications (NASDAQ:CCOI, news, filings) saw its previous high growth rate tail off before the bottom fell out, but has seen some recovery lately. And it isn’t just metro fiber that is doing well on the revenue front, cbey has managed to hold growth quite strong through the churn.
The recession has had a substantial impact though on a few players according to the chart. The wildest path has been traveled by glbc, but much of this has been foreign exchange related so it’s hard to draw too many conclusions, and they did see some recovery this quarter. itcd and PAETEC (news, filings) have been struggling hard to maintain their current revenue levels – the latter with a bit more success – and have seen no recovery so far. But it is obvious that on the sales front, nobody is hurting more than Level 3 Communications (NYSE:LVLT, news, filings).
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Categories: CLEC · Financials
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When you do the EBITDA graph, I hope you will include a note on LVLT’s cost cutting related to prior acquisitions. Those cuts would have occurred regardless of whether there was a recession or not and are not a sustainable part of the value creation of the company.
when you strip out everything but CNS, assuming 2851…my CNS 09 revs est. you get a -9% decline.
I decided not to use LVLT’s core network services revenues in place of its total because it would be special treatment. Many companies in this sector have core and non-core revenues, new and legacy, and growth vs run-for-margin-contribution. In my (evolving) view, to compare across the sector we can only really look at the top line, and discuss such details in the reasons why we see what we see.
why have you prepared your info based on relative growth rather than actual growth (loss) based upon real $$ numbers – it’s rather difficult to follow relative values as the graphs may include % changes of % values, etc. – this is a good start of company to company presentations and comparisons.
Unfortunately, the raw quarterly revenue numbers vary from 50M to 1.1B, and when you put them on the same graph you don’t see much.
Rob:
As long as you are staying with percentages of growth, as a private company, AFS would map as follows:
Q2 08 – 6%
Q3 08 – 8%
Q4 08 – 12%
Q1 09 – 19%
Q2 09 – 23%
We have more demand than capital to address it … we will be solving that problem shortly.
EBITDA growth and EBITDA margin growth quality is a more important measure in my opinion.
If you map churn, we average about 0.7%
Thanks for that data, Dave! I’ll see about adding it to the graph.
I agree, EBITDA and EBITDA margin are more important measures, I will follow up with those.
By the way, our numbers represent organic growth … no M&A skewing …
Rob
Why is AT&t and Verizon not shown on this chart?
dirt
Mainly because they have such a large consumer component to their revenues, both wireless and wireline. That and their ILEC status, I was looking at CLECs for this study. If I were going to look at ILECs with both consumer and enterprise revenues, I would take the wireline businesses of AT&T, VZ, Q, CTL, FTR, and Fairpoint.
Perhaps though I should add Sprint’s wireline revenues to the above graph, hmmm….