Telecom Ramblings

The Wall Street Journal is reporting that the US Department of Justice is now looking at industry giants Verizon (NYSE:VZ, news, filings) and AT&T (NYSE:T, news, filings).  They have opened an informal inquiry into whether the two have abused their market dominance following the M&A that sailed through the previous administration’s more favorable regulatory atmosphere.  They seem to be focused on: [Read more →]

I asked this question last year, and the overwhelming response from readers was that XO Holdings (news, filings) would be the next target for M&A.  But it turned out, none of the companies on my list were consolidated.  I think that is largely because the bottom dropped out of the financial markets, else XO seemed right to me too.  A year later, let’s try it again:

[poll id=”27″]

This time you can choose more than one, which of course means that the [Read more →]

As readers of this blog surely know, I don’t cover everything that happens in the sector.  I write about what seems interesting to me each day, but lots of things slip past.  Often it’s the format of the blog, I may seem like I have lots to say about everything but often it’s just not enough to fill a post.  So given the holiday weekend, I thought I’d catch up on a few such items: [Read more →]

What if you had an auction and everybody showed up?  It used to be that way, but for the last year it has been quite the opposite.  Here in the US, Qwest’s possible longhaul sale was met with the sound of crickets chirping – at least at the price they wanted. Tiscali practically had to beg to find a buyer for its UK unit, and it only managed to sell its international backbone (now TINet) for pocket change. But T-Mobile UK?  First it was Vodafone Group (NYSE:VOD, news, filings) planning a bid.  Then we’ve got Orange (France Telecom (NYSE:FTE, news, filings)) sniffing around. Soon thereafter, O2 of Telefonica (NYSE:TEF, news, filings)  wants a piece of the action. [Read more →]

There is little argument that telepresence is one of the most exciting new technologies coming online.  But one of the biggest raps has been that if each solution is proprietary, only people using the same provider.  This week we took another step toward turning telepresence from a sideshow into a real tool. British Telecom (NYSE:BT, news, filings), Tata Communications (news, filings), AT&T (NYSE:T, news, filings), and Cisco Systems (NASDAQ:CSCO, news, filings) demonstrated a four-way conference between different networks:

[Read more →]

The RUS and NTIA have kindly defined broadband for us, what would we ever do without the US government to define a buzzword for us more than a decade later?  Anyhow, if you want to apply for stimulus money, the broadband you need to be spreading to the underserved is described as: (drum roll please) [Read more →]

There are some balance sheet moves that don’t cost anything but which hint at M&A activity, and therefore can be used to feint.  Others have a price tag, and generally mean there is fire under the smoke.  Level 3 Communications (NYSE:LVLT, news, filings) today announced a consent solicitation for its 12.25% bonds due 2013, seeking to change its terms slightly in exchange for a one time payment of 0.75%.  Essentially, in the event of an acquisition they want to be able to use the cash flows of acquired assets on a pro forma basis to justify additional debt.  In layman’s terms, [Read more →]

It’s official, the merger between Embarq and CenturyTel is complete, and the combined entity will start its new life as CenturyLink (NYSE:CTL, news, filings).  Of course the real re-branding work will come later, this is just at the corporate level – everyone else will still see CenturyTel and Embarq for a while.  The combined company will have 7.5M landlines, 440K video customers, and 2.1M broadband customers across a mostly rural footprint.  Those landlines will of course be declining steadily for the foreseeable future, but we should remember that copper may be [Read more →]

At the end of May ftgx agreed to be bought by Zayo for $11.45 per share or about $88M, however the deal allowed Fibernet to solicit better offers through mid June.  Such an offer in fact has surfaced.  According to this SEC filing, RCN Business (NASDAQ:RCNI, news, filings) has offered $96M in cash, or $12.50 per share.  A bidding war could be in the offing, and not surprisingly none of the three companies is talking much. [Read more →]

Let it not be said that AT&T (NYSE:T, news, filings) is afraid to get its hands dirty.  Today they announced a contract to provide VPN services to Republic Services, which specializes in the collection, transport, disposal, and recycling of waste.  That’s right, AT&T is going to hook up everything from the dumps (err, sorry I mean landfills) to the corporate offices.  They’ll be providing voice, data, and video to some 759 sites in a $13.5M three year deal.  Republic Services merged with [Read more →]

As an separate entity, broadband wireless provider Nextlink apparently no longer exists.  The company’s website now redirects to that of XO Holdings (news, filings) itself with this statement:

XO Communications has realigned its product offerings by integrating the Nextlink Wireless, Inc. broadband wireless products and services into the company’s existing Business Services and Carrier Services business units.

In other words, XO has quietly disassembled the unit and absorbed the pieces.  No doubt most of the revenue will go to the carrier services division, since it was mostly wireless backhaul.  The move will probably let XO save some money by reducing the overhead needed to run it as a separate segment. [Read more →]

ImClone Systems has expanded its relationship with Level 3 Communications (NYSE:LVLT, news, filings), moving from a few transport links to a package including colocation, IP transit, and IPVPN as well.  The network will hook up datacenters in Newark and Frankfurt to ImClone’s two locations in New Jersey, one in New York City, and one in Heidelberg, Germany.  One of the drivers behind the deal is apparently the need to transfer large files between Germany and the NY Metro area, presumably large amounts of medical research data.   [Read more →]

The Phoenix market has a new big data center online, i/o Data Centers has officially opened the doors of Phoneix ONE.  The new facility is, to put it mildly, huge: 538,000 square feet on 31 acres of propery, and is more than four times the size of its other facility – Scottsdale ONE. [Read more →]

In a major deal announced yesterday, British Telecom (NYSE:BT, news, filings) and Tata Communications (news, filings) have signed a five year global strategic voice services agreement.  Tata has now become BT’s primary supplier outside of its main footprint, and BT will supply Tata with access to the UK market and later Europe.  This alliance is a natural one since the two multinationals have rather complementary assets and customer bases.  With carriers of all stripes less and less interested in spending capex these days, we will likely see [Read more →]

Congratulations on finally being confirmed as FCC Chairman!  Now ignore the cameras, roll up those sleeves, and get started already!  You’re already more than 8 years behind on intercarrier compensation, the bickering over special access is getting downright mean, and and there are six trucks from Verizon, AT&T, and Comcast waiting at the loading dock ready to unload this month’s paperwork designed to slow you down.  And oh yes we’re all still waiting for that [Read more →]

Juniper Networks (NASDAQ:JNPR, news, filings) will be an integral part of NYSE Euronext’s new platform, as announced by the two companies today.  The target will be an Ethernet network that scales to very high capacities while maintining ultra-low latency (i.e. sub-50ms round trip).  Ultimately, the new infrastructure will allow consolidation from 10 to just 4 datacenters while allowing them to handle billions of daily transactions.  I’m sure other exchanges are following their progress closely. [Read more →]

For most of this year I have been wondering just how SEACOM, the undersea fiberoptic cable that will bring modern bandwith to the east coast of Africa, was going to navigate the Red Sea and the Gulf of Aden.  More specifically, how they were going to lay cable past the pirates on the Somali coast without running into some sort of problem.  Well, it turns out they did have issues in that area.  SEACOM has now officially announced a delay in the completion of the cable, which had been scheduled to be ready for service this Saturday (June 27).  The new date is [Read more →]

The regulatory battle over special access is not new, but along with the change in political winds has come a new vehicle for the have-nots.  The NoChokePoints coalition fired a volley this week complaining that some 80-90% of backhaul is under monopoly control and called for caps to be put in place to prevent excessive pricing.  Verizon and AT&T fired back immediately but mainly at Sprint, basically calling them pansies for blaming their problems on others.  The name calling, which was of course not as blunt as my own characterization, of course allows them to not answer the charges.  That’s because they can and do take advantage of [Read more →]

The summer season officially started this week, and along with it has come the announcements of several expansions that span the internet infrastructure sector.

In the metro fiber space, Zayo is expanding deep into Youngstown, Ohio. They will be lighting 60 miles in order to reach key locations such as mobile switching centers, central offices and data centers in the metro area.  The first customer apparently will be [Read more →]

Telegeography put out a nice article yesterday about the state of transatlantic bandwidth.  While supply and demand have been largely in balance over the last few years, they point out that pricing remains too low to justify new cables and the current systems will hit their theoretical maximums in 2014.  When the bubble burst, the dollars it took to build these cables was mostly written off.  The ‘balance’ right now is on an incremental basis, when you add in the costs of actually laying a new cable across the Atlantic the numbers don’t add up. [Read more →]

[TheJuice blogs about his financial models and projections for telecom companies, most frequently about Level 3 Communications. Do you want a turn at the microphone? Contact the webmaster]

Hello all.  I thought due to the recent LVLT debt activity it would be a good time to update my valuation metric.  As you can see the debt has moved up BIG TIME, from .70 cents on the dollar to .90!  Wow. [Read more →]

Over the weekend, Hibernia Atlantic completed phase 1 of a new extension of its transatlantic cable to Northern Ireland, bringing the new cable ashore in a beach in Portrush.  The new system, called Project Kelvin, will connect eight cities in Northern Ireland, and five more in Ireland itself on the way to Dublin.  In the world of high technology, the island’s profile has grown as much as anyone’s in the last decade.  But when it comes to bandwidth, everything always has always gone through England first.  With direct connectivity to Hibernia Atlantic’s transatlantic cable, the island will have substantially more options for managing its bandwidth to the rest of the world. [Read more →]

The financial wizards in Broomfield have been busy lately.  In a press release today, Level 3 Communications (NYSE:LVLT, news, filings) announced yet another series of balance sheet moves.  It’s always a bit dizzying to read one of these PRs, but it all boils down to this.

1. They made a deal with an institution that held some $282M of their convertibles due in 2010, exchanging $200M in new converts plus $78M in cash.
2. They have also been very busy in the debt markets lately, and have repurchased some $248M in debt due over the next few years at various discounts for $223M.

What does that mean in the short term?  Mainly that Level 3 has made further progress toward lowering the hurdles it has to jump if the debt markets remain stingy for a long time.   The new maturity profile: [Read more →]