Solid Revenue Growth at euNetworks in Q4

With FibreLac firmly in tow and private equity moving to take full control of the company, euNetworks finished out 2014 with a solid quarter of revenue growth and new sales.  Here is a quick table of of their results in some context.:

in millions of €, UOS	Q4/13	Q1/14	Q2/14	Q3/14	Q4/14
– Colocation		3.9	4.0	4.0	4.1
– Network		21.5	21.1	21.7	23.1
Revenue	24.0	25.4	25.1	25.7	27.2
Gross margin	74.4%	73.5%	75.3%	76.1%	76.6%
Adj EBITDA	7.4	6.5	7.0	7.5	7.5
Adj EBITDA margin	30.8%	25.6%	27.8%	29.1%	27.5%
Capital Expenditures	10.7	6.8	6.9	8.8	6.1
Proxy Cash Flow	(3.3)	(0.3)	0.1	(1.3)	1.3
New Sales (in thousands of €)	600.4	782.6	788.1	630.8	783.7
Installs (in thousands of €)	650.9	640.3	661.6	688.9	734.8
Monthly Incremental Service Revenue	153.8	155.1	225.9	254.2	123.9
Churn (new methodology)	1.0%	1.0%	0.8%	1.1%	1.6%

Revenue jumped to $27.2M, which did include a partial quarter of the results from the company’s new Swiss assets.  EBITDA, however, was flat sequentially due to higher one-time corporate costs in Q4 and a one time benefit in Q3.  Neglecting those one-offs, EBITDA would have been up 12%.

Installs hit a new high and new sales returned to levels seen in the first half, while monthly incremental service revenue pulled back during the quarter.  Churn was higher due to known disconnects, we’ll see where that goes in Q1.

Or will we?  euNetworks and its backers recently moved to de-list the company’s stock from the SGX, now that less than 10% of shares are in public hands given the ongoing private equity bid for the rest of the company.  The Singaporean listing was a holdover from the past, and has pretty much hindered euNetworks’ plans more than it helped.  But the question yet to be answered is what comes next.

Do their backers (led by Columbia Capital) take the unshackled asset on an acquisition binge, do they sell it, do they take it stealth organically, or do they just turn around with an IPO in a market in the western hemisphere?

Consolidation in Europe’s fiber markets has been something of a slow burn, but there is surely more to come.  With the integration of the FibreLac dark fiber assets in Switzerland well underway, euNetworks could easily have an appetite for more in 2015.

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