Broadwing goes adjusted EBITDA positive

Broadwing declared positive earnings before interest, taxes, depreciation and amortization (EBITDA) on an adjusted basis for the first time today.

The company reported a first-quarter EBITDA--adjusted to exclude the effect of restructuring, fixed asset sales and other one-time items--of $2.3 million. It reported negative adjusted EBITDAs of $1000 in the previous quarter and $7 million a year ago.

Broadwing’s quarterly revenue was up 2% sequentially and 3% year-over-year to $224 million. And its net loss was down 54% from a year earlier to nearly $20 million, or $0.26 per share.

Price declines in enterprise voice and transport services are slowing, Broadwing said. And prices for high-speed optical links are even increasing in some cases. Growth in sales of high-speed optical services to enterprises helped drive 14% annual revenue growth in the company’s data and broadband group, which reported $124.9 million in first-quarter revenue, or 56% of Broadwing’s total revenue. More than 60% of the optical services revenue Broadwing reported for the quarter came from large enterprises.

Revenue from Broadwing’s voice services was down 8% from a year ago but up 2% sequentially to $99.1 million. The company attributed the year-over-year decline largely to churn that resulted from its decision to increase wholesale long-distance prices early last year. That decision has “paid off” by delivering better margins, said Chief Financial Officer Lynn Anderson.

The carrier’s wholesale business benefited from the impact of Hurricane Katrina, as service providers with damaged infrastructure moved traffic on to Broadwing’s network. However, those customers are now taking that traffic back, which Broadwing expects will mean the loss of about $1 million in second-quarter wholesale revenue.

“Given that the other guys have their networks back up, I don’t think I can do a lot to save that revenue, though I’d certainly like to,” Anderson said. “We hope we don’t have that opportunity again. I’d rather none of us had to deal with it.”

Broadwing is meanwhile working to increase its revenue per customer. Revenue from its top 15 enterprise customers was up 17% in the first quarter, the company said.

The company is also searching for a new chief executive to replace David Huber, who stepped down about three months ago. Since that time, three officers--President of Sales and Marketing Scott Widham, Senior Vice President and General Counsel Kim Larsen and Anderson--have jointly assumed Huber’s responsibilities. On today’s conference call, the company said the search for a new CEO was proceeding well but that there were no announcements yet from the board of directors.