I have updated my competitive telecom trends page with the published numbers from the second quarter of 2010. This page is automatically generated from a spreadsheet I store in Google Docs and update periodically. However, it was pointed out to me that Google’s charts lack the different symbols one can generate from Excel and therefore aren’t suitable for the color-challenged amongst us – plus they just don’t look as good. Yet they are very convenient for sharing data and automatically posting changes. As a compromise I decided to improve the presentation at least for my regular quarterly blog post on the subject with better charts drawn from the same data. In this post, let’s look at two graphs: relative revenue growth and capex as a percentage of revenue since the beginning of 2008:
For the most part, the overall trends continued as is. Abovenet reclaimed the growth title from CBeyond, but the two remain close. Cogent’s return to growth has them moving steadily toward the leaders. RCN Metro and TW Telecom continued their extremely steady progress, but with no fireworks. Sprint Wireline continued its downward churn, while both Level 3 and Deltacom continued to stabilize. Global Crossing’s pullback from wholesale voice pulled them back, and while XO’s surge is visible we can see they have a ways to go to establishing a new trend.
Now, did capex levels reflect those revenue trends this quarter?
Pretty much. Sprint Wireline’s capex is falling as a percentage of revenue even as its revenues themselves decline, suggesting they will continue on their current trajectory. But there are several companies on this chart which have seen an uptick in capex levels lately that suggest better growth is in the wings. TW Telecom’s capex has now been above 25% for several quarters and is expected to stay there for the second half. Level 3’s capex surged back over 10% of revenue, where it hasn’t been for quite some time, also suggesting second half growth. And, interestingly, Deltacom seems to be spending more of late, reflecting perhaps a greater focus on their fiber assets. XO’s spending has been up slightly in the past few quarters, but not enough to suggest Q3 will be as big as Q2.
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Categories: CLEC · Financials · Internet Backbones · Metro fiber
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Interesting data. I think XO’s Q3 will more than likely be as big as Q2. I know they can pull it off.
I’m curious if the new spending will result in new revenue growth. One thing that clouds this data is that we don’t see hard spending numbers, but rather than as a percentage of revenue.
My point is that while some companies seem to be spending more (GLBC, as an example), I think I can take from these that spending has stayed stable – since revenue has fallen, and spending as a percentage of revenue has increased.
What will be interesting to see if the increased revenue that companies like LVLT and ITCD appear to be spending will result in big increases in revenue – much like it appears TWTC has.
Each time that I ponder this TWTC business model and healthy market cap response being afforded to it by “Mr. Market,” while fearing the lost market opportunities that will befall it moving ahead, I keep wondering when soccer moms are going to jump, or who will jump on it! imo
What if AKAM bought TWTC? The combination of the two would be a phenomenal way to test what happens after wards to companies without ownership stakes in network ramps commonly referred to as “access charges,” by the underlying owners of those ramps during exponentially changing supply/demand equation environments requiring lots and lots of fiber.
I’m going to play the sideline female MS advisor caring about her client’s child on the soccer field, in one of those previously outlandish commercials where she acted as a quasi soccer mom cheering the boy on.
That’s it Paulie! Go ahead, kick the TWTC ball! Kick it hard Paulie! You can do it! 😉
Before an AKAM and TWTC fantasy can come true … Larissa needs less type 2 and more fiber into buildings where TWTC has type 2 in place. This is the rub the analyst have with TWTC v. an AboveNet. Plus, analyst don’t understand the lumpiness of the order/build/bill cycles associated with fiber – even though Larissa explains it to them just about every quarter.
Dave, you were on a roll yesterday! Except I think you should stick to censoring while “moderating” other venues including your own, so that, we can all “learn less.” I now know you are not a “Libertarian.” For a Libertarian would PEE in the FACE of any FREEDOM DESTROYING individual. “FREEDOM!!!” imo 🙁