After looking at EBITDA Margin, Capex, and EBITDA-Capex across the sector, I’ll finish up this series with a look at Revenue. Everyone wants to grow of course, but in this recession there has been a divergence in the sector’s growth profile. Seen alongside the EBITDA and Capex trends, we get a fuller picture of what is going on in the sector. Here is the relative revenue growth chart over the past 7 quarters:
So who is growing the fastest in this tough economic environment? cbey and abvt followed by RCN Metro and Cogent Communications (NASDAQ:CCOI, news, filings). Three of those are managing such growth by by leveraging and investing further in their metro fiber footprints, demand for which has been largely untouched by the recession. TW Telecom (NASDAQ:TWTC, news, filings) on the other hand, has grown steadily but not particularly spectacularly relative to these others.
CBeyond on the other hand is quite a different type of provider, but has continued to drive impressive revenue growth. As we saw from the EBITDA-Capex, they have taken a different strategy in dealing with the economy, spending their cash on expansion in spite of it. It has been working in terms of revenue, but unlike the metro fiber players its margins have slipped as EBITDA has not risen in synch. When the economy recovers and its new markets start kickin in, will we see CBeyond’s EBITDA rise to match its revenue performance?
Down below of course we have Level 3 Communications (NYSE:LVLT, news, filings) and Sprint Nextel (NYSE:S, news, filings) which have suffered from heavy revenue pressure all year. We saw them at the top of the EBITDA-Capex chart and the bottom of the Capex chart, as both companies are clearly maximizing their operating cash flow at the expense of revenue growth. Above that PAETEC (news, filings) and itcd which have also lost some ground yet maintained their EBITDA and margins, steering a rather conservative route through the storm.
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Categories: CLEC · Financials · Metro fiber
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i think nows the time to look at relative valuation rob…..just to top it all off!
This may be too simple a viewpoint as it’s easy to get revenue growth by cutting margins, especially when your network utilization is low. I would suggest plotting a gross margin to debt load ratio over time to see who is healthiest relative to competition in this economy.
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Global Telecom guy
If you look at global crossing enterprise north america relative revenue growth it will show higher than most of its peers given strength there. It is more of an apples to apples comparison bc most of these are regional operators. Thank you.
Hmmm, Global Crossing may be the only company out there that gives enough granularity in their financials to pull that off and yes their US revenue growth has been pretty good lately. But I’m sure you realize that if I did so on the EBITDA margin and EBITDA-Capex charts it wouldn’t look so favorable since the international markets prop up those numbers for GLBC.