Interoute Closes Out 2010 With an Appetite

Pan-European operator Interoute offered up its 2010 results today, showing off double digit revenue growth and its first full year of profitability.  Full year revenues of €295M were up 10% from €269M, while adjusted EBITDA rose 46% to €58M from €40M.  That corresponds to an EBITDA margin of 20%, up strongly from 15% in the prior year as the company’s scale is starting to tell.  The company has also declared its interest in spending its expanding cash flow on inorganic growth.

Actually, they have already demonstrated that interest of late with two very different deals.  They acquired KPN’s German EuroRings footprint recently, in one of the bigger raw fiber deals on the continent lately along with the LVLT/GLBC deal. And last month they also acquired Visual Conference Group, which adds to their cloud-based enterprise portfolio.  Interoute’s M&A hunger from here seems to lie in both directions – more fiber and more services.  On the fiber side, Interoute has been focusing on central and eastern Europe, though you never know what assets might become available.

The fiber marketplace for M&A in Europe hasn’t been as hot yet as in the US, but it definitely seems to be heating up.  With both Interoute and Level 3 buying thus far, one wonders if the likes of Colt or Teliasonera International Carrier will respond in kind.  Unlike in the US, where many of the smaller targets were absorbed last year, there are many possible targets.

Interoute also unveiled a deeper relationship with SEACOM, the recently built cable hooking up the east coast of Africa.

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Categories: Financials · Internet Backbones · Mergers and Acquisitions