Market Insight

Colt Group reports modest Q1 2014 growth

April 23, 2014

Stelios Kotakis Stelios Kotakis Senior Research Analyst, Service Provider Technology

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Colt Group revenues for the first 3 months of 2014 were €399.8 million (Q1 2013: €392.1 million) and EBITDA of €74.1 million (Q1 2013: €80.5 million). Capital expenditure for the first quarter of 2014 decreased to €74.5 million. As for Colt’s business line results, Network Services and Voice Services revenues were relatively flat, while Data Centre Services revenue grew 8% (Q1 2013 declined 3.4%) and IT Services revenue grew 15% (Q1 2013 grew 4.3%). Colt provides communications and media managed services, predominantly for banks and telecommunications companies in Europe.

Colt’s results for the past few years have been a relatively stable quarterly average of €395 million, and 2014 has proved no exception. However, net earnings have been under pressure as competition in the data transfer and fibre leasing industry increases, pushing providers such as Colt towards higher margin opportunities such as video services and processing or data centre services.

OUR TAKE                                 

While Colt’s core transport services have remained flat, data centre and IT services are core to recent growth. The company announced its intention to withdraw from approximately 85% of its carrier voice contracts over the next few months, a significant reposition for a company built around backhaul services. Colt is restructuring operations to better position its managed services and data centre segments as growth catalysts. Demand for network services and support is on the rise mostly reflecting the need for data transportation and storage. Colt’s infrastructure connects over 150 cities in more than 20 countries with 43,000km European network and 27,000km transatlantic network, and also supports 20 data centres across 10 countries.

Despite the fact that Colt hasn’t made any acquisitions to upgrade its media services so far, it has indirectly scaled its offering within the industry by investing into its core network, and by focusing on utilizing this platform to further extend and support its managed services solutions. Currently, Colt looks is focused on network and data centre services expansion, with new PoPs, extended reach and increased capacity. Apart from that it targets further product development especially for managed services and also for its core product portfolio.

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