Image may be NSFW.
Clik here to view.
For the first six months of the current financial year, Colt has seen both revenue and EBITDA dip slightly. Revenue was down 0.2% to €788.9m, while the EBITDA margin slipped from 20.27% to 20%. Although the company has seen underlying improvements with growth in strategic areas – managed networking and IT services, and data centre related revenue – this was “overshadowed” by foreign currency movements, regulatory voice pricing and churn of legacy data products.
One of those strategically important areas is data centre services, which saw revenue growth of 10.7%. We recently spent some time with the management team in the Enterprise Services (ES) business and know the time and resource that has gone into developing the strategy and portfolio in this area (e.g. “significant investments” in cloud and IT services platforms, and automation/orchestration tooling). A milestone in H1 was the launch of Colt’s enterprise grade cloud services – through both direct and indirect channels – across Europe and Asia.
The team has, quite rightly, recognised that to make it in IT services, it needs to totally transform itself from ‘living and breathing’ like a telco. For example, there have been many new recruits from the IT services industry into the ES business, notably into the leadership and architecture teams. However, the challenge for Colt’s IT services business in the UK market is its scale. We estimate this business generates c€60m in revenues, which makes it a little larger than some of the niche data centre services providers, such as Adapt (see Adapt acquires Sleek) at c£45m.
As for Colt as a whole, the company is sticking by its guidance that it will grow (at constant currency) in the full year.
