When it comes to fiber-based telecom, there are ups and there are downs – and then there is TW Telecom (NASDAQ:TWTC, news, filings). In their earnings report after the bell, the company reported revenues of $304.8M, EBITDA of $109.6M, and earnings per share of $0.05. Those results are essentially in-line with expectations, except perhaps the earnings per share which beat by $0.01. Additionally, TW Telecom doesn’t offer much in the way of guidance but who needs it? You could set your watch by these numbers, here is a summary table of the last 4 quarters ($ in millions):
| Q4/08 | Q1/09 | Q2/09 | Q3/09 | |
| Data/Internet | 107.6 | 112.0 | 115.8 | 120.0 |
| Network | 95.6 | 93.9 | 93.2 | 92.3 |
| Voice | 83.0 | 83.1 | 83.5 | 83.8 |
| Intercarrier Compensation | 8.6 | 8.6 | 8.4 | 7.8 |
| Total Revenue | 294.6 | 297.6 | 301.1 | 304.8 |
| Cost of Revenue | 126.2 | 123.7 | 123.2 | 127.2 |
| SG&A | 70.6 | 75.8 | 75.5 | 74.6 |
| M-EBITDA | 104.2 | 104.4 | 108.9 | 109.4 |
| M-EBITDA Margin | 35.4%1 | 35.1% | 36.2% | 35.9% |
| Earnings per share | 0.01 | 0.02 | 0.04 | 0.05 |
| Revenue Churn | 1.2% | 1.3% | 1.3% | 1.2% |
| Capital Expenditures | 72.9 | 73.4 | 69.2 | 59.9 |
| Free Cash Flow | 12.7 | 14.5 | 23.6 | 33.8 |
Rarely do we get trends so easily discerned. Data and Internet revenues continued their 4-5% growth each quarter, network revenues and intercarrier compensation drifted slightly downward, and voice revenues slightly upward. M-EBITDA, FCF, and EPS continued to steadily increase, with M-EBITDA margins holding in the 36% range. Revenue churn remained ‘high’ relative to historical levels at 1.2%, but quite low compared to the rest of telecom.
Capital Expenditures have trended downward a bit, they had been up due to several colocation projects and opportunistic fiber purchases. Total capex for the year is forecasted at $250-270, which implies Q4 will be roughly similar to Q3. With falling capex has of course come higher free cash flow and a fatter wallet. With $432M in cash on hand, positive cash flow, no debt maturities for more than 3 years, and no financial covenants to worry about – they can probably raise money on pretty good terms in this market. Hence, the company remains in a very favorable position if the opportunity arises.
TW Telecom continued its on-net building dominance, adding 236 more to its total of 10,170 enterprise buildings – they also connect more than a thousand wholesale sites such as large data centers and wireless switching centers, etc.
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Categories: Financials · Metro fiber
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It would be interesting to see how many ON-NET buildings they have in each specific market. I think TW Telecom has over 70 markets which is an average of 145 buildings per market.
Especially Tulsa OK, huh?
I still don’t really understand the wide range in level of secrecy across the sector. Some companies publish every address of every on-net building. Others think doing so would somehow compromise their business. One would think that one or the other opinion would prevail.
Certainly I would prefer everyone publish everything!
I’ve often wondered about the same thing. One possibility that might account for this dichotomy: those who pull fiber publish; those who piggyback don’t? Do you have the necessary level of granularity within your records to test this thesis? Curious …
Unfortunately, there doesn’t seem to be a good correlation as far as I can see. For instance, Cogent leases all its fiber, and lists every building. I think it’s more about individual corporate culture. Much like individuals, some are gregarious, some are secretive.