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July 23, 2009
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tw telecom (TWTC),
a leading provider of managed networking solutions for enterprises, has establish a new co-location facility in Denver. This new facility will provide state-of-the-art technology together with secured and environmentally protected data back-up facility to various enterprises of that area. Worldwide deployment of high-speed broadband networks, implementation of 3G wireless technologies, and massive demand for Internet data transport capabilities, along with online video services, have significantly increased the need for co-location centers. Various industry sources indicate that IP traffic may grow at a CAGR (compound annual growth rate) of 46% from 2008 to 2012. This supports the case for an improved business outlook for data center expansion.
The company has recently connected its Denver and Colorado Springs metro network using the fiber backbone. tw telecom’s success hinges strongly on its fiber optic network. The company targets the enterprise market, where the opportunity to sell advanced metro-Ethernet- and IP-VPN services is substantial. It has an extensive transport network with a significant presence in 75 metropolitan markets, providing fiber connectivity spanning 26,961 route miles. tw telecom is one of the top three Ethernet-enterprise service providers in the U.S. commanding a market share of 28%. Overall growth in the business enterprise sector is likely to continue, although some disconnects have been asssociated with mortgage-related companies and small business entities.
Co-location is a competitive market. In addition to three of its closest competitors, Equinix Inc. (EQIX),
Terremark Worldwide Inc. (TMRK)
, and Switch & Data Facilities (SDXC),
tw telecom also competes with large telecom carriers, including Cincinnati Bell (CBB),
AT&T (T),
and Verizon Wireless (VZ)
who typically provide interconnection services through a single-owned network and offer a wider selection of services. Despite this, tw telecom has been able to establish a solid business model with a stable recurring revenue stream. The company generally enters into long-term contracts with clients, providing top-line stability especially during adverse economic conditions. Approximately 64% of tw telecom’s total revenue is now supported by three- or five-year contracts. Furthermore, the company has a highly diversified customer base spanning several vertical market segments.
We reiterate Buy for tw telecom.
Read the full analyst report on "TWTC"
Read the full analyst report on "EQIX"
Read the full analyst report on "TMRK"
Read the full analyst report on "SDXC"
Read the full analyst report on "CBB"
Read the full analyst report on "T"
Read the full analyst report on "VZ"
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