TSX:AXX - Post Discussion
Post by
the_ocotillo on Sep 20, 2012 12:14pm
When is the big payoff with Covage?
“Covage’s total investment in the network is $162.5 million (€125.9 million). The regional communities have provided grants of $137.7 million (€106.7 million) for a total investment of over $300.3 million (€232.6 million)”.
It's hard to see how Axia will get a return anytime soon on it's investment in this network. Maybe we will start seeing some more dramatic results with the recent market site expansion but up to this point the results have been less than dramatic. Maybe the weak Euro can explain some of it but I was expecting much more at this point.
Covage finally did $5m in NGN revenue for a quarter, but the Covage EBITDA margins really aren't that good. And I don't know what to make in hearing that DSL pricing is the culprit. “The previously announced reduction in DSL pricing has had a negative effect on Covage's revenues during the latter half of FY12”.
Covage addressable market sites will increase to 46,000 from 34,000 sites (I guess we are currently at 41,000 sites). Maybe this FY2013 we will start seeing something more dramatic from Covage.
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