Telecom Ramblings

The boom in datacenter construction continues unabated, today with plans for two new facilities by Equinix (NASDAQ:EQIX, news, filings) and Digital Realty Trust (NYSE:DLR, news, filings).  

Equinix is adding a second datacenter in Hong Kong, to be titled HK2 in their usual fashion, which will be built in the western part of the New Territories.  The new facility will cost $63M and house 1450 cabinet equivalents when complete, although phase one will start with [Read more →]

According to an article by TechCrunch last night, Cisco Systems (NASDAQ:CSCO, news, filings) has made a pre-IPO bid for Skype (news, filings) [a subsidiary of MicroSoft (:MSFT, news)] .  Now, it’s hard to discount the possibility given that Cisco has been buying everything that isn’t nailed down and superglued just in case.  It has also been rumored that Cisco has bid for Skype once before, and there are no structural reasons why they couldn’t do this out of petty cash.  I’m just having trouble finding a convincing rationale *for* such a deal. [Read more →]

Given the surge in M&A activity this year, I thought it might be worthwhile to take a look backwards and remember some of the mistakes made in acquiring and integrating telecommunications assets over the past decade.  After all, too large a percentage of M&A activity winds up destroying rather than creating value and you know what they say about those who forget their history.  Now, this list is of my own creation, but I’m hardly the last word on the subject.  Hence, I’ll keep it open to further additions, details, and corrections from readers, so don’t hold back.  These are not in any particular order. [Read more →]

For your Friday reading pleasure, take a look at this one over on Data Center Knowledge.  Imagine coming in one morning to see a co-worker passed out on the floor with a .45 semi-automatic on the floor next to him, and your $100K server full of holes?   After waking him up, he tells the police what may be the lamest story of the week about someone mugging him, drugging him, stealing the gun, shooting the server, then apparently forgetting the gun.  Actually, [Read more →]

Seemed like it took a rather long time to close, but ABRY Partners has finally completed its acquisition of RCN.  The $1.2B deal was originally announced five and a half months ago back in March, and the question I had at the time is what ABRY’s intentions were toward the metro fiber arm of the company, RCN Metro.  That question is at least partly answered. [Read more →]

For a small company, FiberLight has had a voracious appetite for organic expansion lately.  The builder and operator of metro fiber networks is expanding its networks deeper into Virginia, announcing today its plans for a new route to Charlottesville.  The build will extend the Culpeper route the company constructed last year by some 46 miles and complete a direct connection to the Washington DC area and the other 500 route miles they have in the region. [Read more →]

According to reports, private equity firm Court Square Capital Partners is buying up Fibertech, taking it off the hands of Nautic and Ridgemont Equity, which used to be part of Bank of America.  The value of the deal was pegged at $500M, though the extent to which that number has been rounded off is unclear to me.  Fibertech builds and sells/leases metro and regional dark fiber in tier 2/3 markets across the northeast and mid-Atlantic, plus a couple in the Midwest.  Court Square will pay for the deal partially via its own funds, partially via debt to be raised, and partially via an investment by Fibertech’s management. [Read more →]

I have been travelling for the past 36 hours, and since that included all of a Tuesday I have some catching up to do now.  Here’s some rapidfire responses to recent news items:

Juniper Networks (NASDAQ:JNPR, news, filings) won a new customer for its Meda Flow Solution.  CDN challenger BitGravity will use it to overlay on its distributed origin architecture.  They hope to gain improved scalability, allowing them to grow quickly while adding fewer servers and thereby [Read more →]

Level 3 Communications (NYSE:LVLT, news, filings) continued its sustained PR blitz with two more contract wins so far this week.  

Yesterday it was a three year deal with transportation solutions provider CAP Logistics.  Level 3 will provide a package SIP trunking, IPVN, colo, and dedicated internet access, which will be deployed in Denver, Salt Lake City, Houston, and Illinois.  An interesting mid-market win, and they need [Read more →]

A few weeks ago, Dave Rusin over at Telecom Straight Shooter posted this article previewing some nice new work by Andrew Odlyzko from up at the University of Minnesota.  Dr. Odlyzko is of course very well known in the bandwidth world for his independent research on traffic growth rates amongst other things.  Dave included a letter from him seeking data from the movers and shakers in the industry, focusing on the telecom bubble of a decade ago.  To quote Dr. Odlyzko’s email: [Read more →]

Following up on updates to my revenue/capex and EBITDA margin/cashflow posts, we take a look at the overall relative valuations across the sector since the first quarter of 2008.  The metric here is the ratio between Enterprise Value and adjusted EBITDA, which is a common way of looking at valuations in this sector.  Missing from the comparison are Sprint Wireline and RCN Metro, simply because we can’t calculate an EV for them as they are not separately traded.  With no further ado, here is the updated chart: [Read more →]

In the previous post, we looked at relative revenue growth and capex trends, updating my competitive telecom trend charts for the second quarter.  But while revenue growth is important, profit is obviously moreso.  Comparing profit directly doesn’t tell us much because it has too many pieces, not the least of which are very different levels of debt and amortization.  In telecom, the common metric to measure the performance of the operations independent of the balance sheet is EBITDA – which has its own warts but gives us a commonality with which we can do comparisons after normalizing by revenue to get EBITDA margins.  As always, EBITDA margin varies greatly depending on business model, with fiber-heavy companies having high EBITDA margin and high capex, and fiber-light companies the opposite.  Here is the latest graph showing EBITDA margin trends across the sector since the beginning of 2008: [Read more →]

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: [Read more →]

Thanks to reader Frank Coluccio who pointed me toward a recording of the Fiber Infrastructure Panel at Oppenheimer’s Technology, Media & Telecommunications conference that can be found on the website of abvt.  The panel’s experts included Abovenet’s Bill LaPerch, Zayo’s Dan Caruso, Allied Fiber’s Hunter Newby, USMetroTel’s Frank Mambuca, and CityTel’s NiQ Lai.  That group contains some of the greatest prophets of fiber and the dumb pipe out there right now, spanning a very wide [Read more →]

In Europe this morning, Colt Group (LON:COLT, news) launched an attack on the low latency bandwith marketplace.  The trans-european fiber operator is now offering 4.22ms between London and Frankfurt as well as 2.65ms between Paris and Brussels.  The former has been a battleground for a while of course, but the latter is a new one for me.  Is the Paris-Brussels route catching the low latency financial trading bug too?  The more the merrier I guess!   It’s refreshing to get actual numbers for the latency on these routes, although it is just a snapshot since they are continually driving further [Read more →]

According to various reports originating with option trading activity, there are rumors circulating that Akamai (NASDAQ:AKAM, news, filings) could be a takeover target.  The likely buyer?  Obviously a telco or a cable company according to Silicon Alley Insider.    I know I’m something of an M&A groupie at times, but there are merger possibilities out there that just make no sense, and this is one of them.  No, it’s not that a telco or cable wouldn’t find Akamai of value, nor is it that they couldn’t find some cost savings, nor that the combined company couldn’t kick some major ass.  It’s just that pesky net neutrality thing, and the sloppiness of the conversation around it. [Read more →]

According to ArsTechnica, the Belgian ISP Telenet recently published a list of its top 25 downloaders.  At the top of the list was a customer who sometime this summer managed to burn some 2.68 Terabytes of data in a single month.  That’s an impressive number, almost a thousand times the average broadband customer and worthy of almost anyone’s definition of a ‘bandwidth hog’.  No word on precisely what data was being downloaded, but it can’t very well have been anything other than a whole lot of video.  But as Rudolf van der Berg points out over on his Internet Thought blog, it actually isn’t [Read more →]

Over on the Telecom Ramblings Jobs Board, we have a new job posting.  Zayo is looking for an Application Developer in Louisville, Colorado.  The position involves working extensively with Salesforce.com’s Force.com platform, adding new features and functionality to Zayo’s backoffice systems.  

I have been running this jobs board for a while now, [Read more →]

Here’s a quick summary of several news items that crossed the wires over the past day or two:

Metro Fiber operator FiberLight won a contract with the Atlanta Journal-Constitution, a member of the Cox Media Group.  The newspaper is leveraging multiple GigE connections to hook up its facilities across the Atlanta metro area in a highly redundant, secure private network.  Earlier this summer, [Read more →]

Fresh off its acquisition of all those rural lines from Verizon, Frontier Communications (NYSE:FTR, news, filings) has raised issues with the proposed purchase of FiberNet from One Communications by nTelos (NASDAQ:NTLS, news, filings).  Apparently, these guys actually enjoyed all that sharp elbow work they had to endure from the West Virginia PSC and politicians in general back in the Spring, because they’re back for more.  Well, maybe not more of the same as they are on the other side of the fence this time. [Read more →]

Here is a quick summary of several fiber contracts and expansions that have crossed the wires in the last few days:

Western regional fiber operator 360Networks finished a fiber build for Advanced Data Centers.  The build consisted of diverse laterals into the company’s McClellan Park facility, which sits on an former Air Force Base.  According to ADC, they can now offer low latency 2.3ms connectivity over to major datacenters in the SF Bay area while not having the same earthquake risks. [Read more →]

Windstream (NYSE:WIN, news, filings) is buying itself a bunch of fiber!  Today the rural ILEC announced that it has agreed to purchase Kentucky Data Link (KDL) as well as Norlight from Q-Comm.  The transaction is valued at approximately $782M, the components of which will be 20.6M shares of stock, $278M in cash, and the repayment of $267M in net debt.  From what I hear, this was not Windstream’s first offer, but rather its third.  Additionally, there were active private equity bidders in the mix, but [Read more →]

glbc offered up an interesting press release this morning.  TTX Company will be using their EtherSphere, IP VPN, and Dedicated Internet Access services to support operations across seven locations as well as backup services for their data center, displacing its previous provider.  TTX provides railcars and freight car management services in North America, which is not the kind of company one thinks of as needing bandwidth and high tech communications systems.  But I guess keeping track of 200,000 flatcars, boxcars, and gondolas in the modern age takes a modern IT infrastructure these days.  [Read more →]