Subscriber Values: Q4 2007

by Alex Goldman ISP-Planet Managing Editor [April 8, 2008]

Subscriber numbers are from ISP-Planet's list of Top U.S. ISPs and from company reports (and are as of December 31, 2007). Market capitalization data is as of market close, April 3, 2008, as reported on Yahoo Finance, except for PAETEC, which is as reported on Forbes.

Our ISP rankings now contain only one pure, public ISP. United Online no longer considers itself an ISP. Time Warner is downplaying the importance of AOL.

Notes on EarthLink
EarthLink subscribers were 2,624,000 narrowband (and shrinking), 1,059,000 broadband (also shrinking), 100,000 webhosting accouts (shrinking), and 93,000 business accounts consisting of 27,000 dialup and 66,000 business accounts (also shrinking). The company is still experiencing net subscriber losses. EarthLink's struggles, including churn, which is honestly detailed in the SEC report, illustrate how difficult it is to be a non-monopoly ISP today.

Our CLEC listings require close examination. We are comparing a wide variety of companies, and we welcome your comments

Notes on CLECs
Fairport, N.Y.-based PAETEC reported serving 119,987 T-1 lines. Since it also delivers VoIP and also delivers high margin T-1 lines, its average revenue per customer (ARPU) is higher than many other CLECs on this list, justifying the price difference.

Santa Clara, Calif.-based Covad Communications Group had 487,000 broadband lines (416,000 wholesale and 71,000 direct), 2,300 VoIP customers with 4,000 sites, and 3,600 fixed wireless broadband customers. Wireline subscriber numbers fell, and fixed wireless and VoIP failed to grow.

Anchorage, Alaska-based General Communications (CGI) competes with the ACS Group (below). The company reported the following subscribers:

Anchorage, Alaska-based Alaska Communications Systems Group (The ACS Group). It served 185,658 access lines. It had 146,450 cellular customers, 65,256 long distance customers, and 56,176 internet customers. Not counted are advertisers served through the company's directories. The company is more like a rural ILEC than a CLEC.

ISP sale
Q4 2007 saw one publicly announced purchase of an ISP that we know of. Multichannel news reports that SureWest acquired Everest Broadband for $173 million. The deal closed on Dec. 6, 2007. It covered 37,500 customers and was therefore worth $4,613 per customer. Key to the deal's high valuation were 1,600 commercial customers.

Nevertheless, the article notes:

The price also represents a healthy cash flow multiple–at 9.1 times Everest’s estimated third quarter 2007 annualized cash flow, compared to past overbuilder deals that have been valued at about 8.5 times cash flow.

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