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Zayo's fiscal Q2 revenue rises to $243.5 million from acquisitions, on-net fiber buildouts

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Zayo reported on Friday that a mix of organic and acquisition-related growth drove up revenue by $13.8 million sequentially to $243.5 million in second fiscal quarter that ended on Dec. 31.

In particular, Q2 growth was driven by its recent purchases of three regional fiber-centric service providers: FiberGate, USCarrier and First Telecom Services, and an increase in net installations. Purchasing these three companies allowed Zayo to expand its fiber footprint in various areas, including the Washington, D.C., area, the Southeast, and the Northeast and Midwest.

Zayo's acquisition streak continued through the end of the year when it purchased Litecast, a Baltimore, Md.-based dark fiber provider, for $22.2 million, a purchase that will give it an additional 110 on-net buildings and access to the city's major data centers and carrier hotel facilities. Besides increasing its fiber footprint in the Baltimore, Md. market, Zayo gains a large set of enterprise and government customers, particularly within the healthcare and education segments.

All of these purchases were complemented by $58.9 million in capital spending in the quarter, including the connection of 436 new buildings to its fiber network.

Lighting new buildings with fiber, including a mix of traditional office buildings, cell sites, and data centers paid off for Zayo. During the quarter that ended on Dec. 31, the service provider reported that it generated additional monthly revenue of $4.7 million associated with gross installations. Another contributor to revenue growth was an increase of $2.2 million to other revenue recognized in the quarter.

However, the increase in organic growth was partially offset by $3.3 million in monthly revenue related to total customer churn.  

Quarterly adjusted EBITDA was $137.3 million, up $14.7 million from the first fiscal quarter. On a year-over-year basis, revenue and adjusted EBITDA increased by $154.5 million and $92.2 million, respectively, over the second quarter of fiscal year 2012.

Zayo said that the sequential quarter Adjusted EBITDA growth of $14.7 million "was driven by revenue growth (both organic and acquisition related) and the realization of cost savings associated with the AboveNet acquisition."

The service provider also narrowed its losses by $33.4 million from $53.4 million in the previous quarter, while up $18.9 million over the first quarter of fiscal year 2012. It attributed the reduction in losses to growth and cost savings.

For more:
- see the earnings release

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