Zayo Group (news, filings) turned in its usual steady performance for its fiscal second quarter, boosted especially by one month’s revenue from the 360Networks purchase. Here’s a quick table of some of the company’s results in context:
| $ in millions | Fiscal Q2/11 |
Fiscal Q3/11 |
Fiscal Q4/11 |
Fiscal Q1/12 |
Fiscal Q2/12 |
|---|---|---|---|---|---|
| – Zayo Bandwidth | 54.6 | 54.7 | 55.9 | 56.5 | 64.5 |
| – Zayo Fiber Solutions | 11.4 | 11.9 | 13.5 | 13.2 | 15.3 |
| – zColo | 7.7 | 9.1 | 9.5 | 9.7 | 10.2 |
| Total Revenue | 72.3 | 74.2 | 77.8 | 78.4 | 89.0 |
| Adjusted EBITDA | 31.1 | 32.7 | 37.2 | 38.0 | 45.1 |
| Adj. EBITDA Margin | 43.0% | 44.1% | 47.8% | 48.4% | 50.6% |
| Capex | 37.4 | 29.1 | 24.9 | 28.6 | 31.4 |
| Buildings on-net | 4041 | 4228 | 4393 | 4542 | 5194 |
Revenues: Of the $10.6M increase, $7.0M came from the 360networks purchase, while some termination revenue helped boost the rest above usual levels. With a full quarter of 360Networks revenue and some additional from the MarquisNet purchase as well, they will clearly be solidly above the $100M/quarter mark in the first quarter.
EBITDA: Adjusted EBITDA of $45.1M was up sharply from the third quarter even when the 360Networks results are backed out. Some of that was from termination revenue, but a fair amount came from synergies realized from past acquisitions. Adjusted EBITDA margin of has now reached an altitude of 50.6%, and one wonders just where it will level off. Overall earnings themselves dipped slightly into the red, pulled down by higher stock compensation expenses.
Expansions: Zayo is building on all fronts as usual, and during the quarter they added 553 route miles of fiber and 196 buildings to their network in addition to what they acquired from 360networks. 160 of those were towers, which is about the same as it has been in recent quarters. But during the quarter they clearly took on some substantial additional fiber-to-the-tower business. They began work on eight new FTT markets during the quarter and substantially raised the number of on-net towers they have under construction to 697. Only two of the new markets were in 360networks territory up in the Pacific Northwest, while four are within the company’s Mid-Atlantic footprint.
Zayo integrates its acquisitions very quickly compared with most other fiber operators, but not so quickly that Q4 has yet shown us what they will do with the 360networks assets that 360 itself was not doing. Zayo has even more places to put capex to work in 2012, and it will be interesting to see where they put their focus. On the inorganic front, it’s hard not to wonder when they will add that one last piece of the puzzle – a substantial presence in the rest of the southeast and especially Florida.
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Categories: Financials · Metro fiber
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If anyone has any information on how to make some inroads on fiber to the tower, I am interested. I’ll soon have access to hundreds of miles of currently unique fiber routes.
Email me directly and we can talk offline. Edward.kinsella@zayo.com.
I contacted Ed directly, but I’ll publicly state I’m cautious of a would-be competitor wanting to help. :-p
Heck it’s Zayo, he probably wants to buy the fiber. 🙂
Be cautious of the competitor that thinks they can go it alone. Cooperate to compete is todays reality.
MHammett – it really depends what you deem as “unique”. My colleague and I have some stimulus fiber which we used to leverage some backhaul sites with an aggregator, http://www.pegbandwidth.com; maybe they can help.
Thanks!
go ahead and email me at teeones@gmail.com and i can give you more details about what we structured and who we worked with there….
mhammett,
Happy to discuss how you might engage on FTT. I’ve worked with most of the fiber providers, wireless carriers and tower owners, so would be willing to give you an overview and make any introductions you feel would be helpful. email me at p.jameson.33@gmail.com if interested.
it’s inaccurate to use the term FTT for Fiber to the Tower services. it should be FTTT.
Zayo is looking to develop a partner program that is aimed at creative people or companies that are putting together fiber or bandwidth solutions… Please ping Glenn.Russo@zayo.com if interested. Mhammet and Teeones, this might be something worth kicking around for the two of you.
Is Zayo still a turn and burn company? Meaning u still have no culture and grind ur people and contractors to the ground?
When acquisitions dry up and there isn’t really a plan for intergration (and there is not) what will u do Dan?
Yea and BTW Glenn is just a Jr. Lt. and only does what Dan says based on the last time he told him what to do. Which could be a late night call, sales force IM, chatter, or, an increase in a small amount of stock options.
Things will catch up to Zayo soon. Current employee that likes her job but does not love it, and looking to be appriciated. Yet it won’t happen here, just paying the bills.
How long does it take per tower to B/E on the build and equipment?
I suppose it depends on how far the build is. :-p
Dan Caruso,
Are you indirectly helping Level 3 roll up a big Warren Buffett like snowball?
http://blogs.denverpost.com/thebalancesheet/2012/01/03/zayo-group-makes-18th-acquisition/2511/#comments
I think maybe he’s more focused on helping himself roll up a big Warren-Buffet-like snowball. 🙂
Rob,
You hit the nail on the head. When push comes to shove, the little i focus – me me me will get trampled by the big elephant herd in the crowded room, when Warren Buffett pulls his trigger on his big elephant gun
Zayo will stick a carrort in the snowman face – top snowball, and say what a good boy am I. Like little jack corner fooling with plums.