To: Frank A. Coluccio who wrote (3099 ) 3/9/2002 6:30:59 PM From: Rich Wolf Read Replies (1) | Respond to Frank, the other part of my reasoning is that since the bulk of the expense is not the laying of the fiber but the lighting and routing equipment (needing some 35 or 40 wavelengths on OC192 to make it worth lighting a strand, from what I read), then to minimize capex, Q would want to avoid not only the laying of new fiber (as you point out there is more than adequate dark fiber which can be inexpensively leased, this is the part of the so-called and somewhat overstated 'bandwidth glut' that seems an accurate assessment) but to additionally look at buying wavelengths instead of equipment, even for some long-haul. Sure, it reduces their margins, but at least there is much less capex, and Q needs to worry very much about cash-flow. They bought themselves a year to sort things out, by grabbing the revolver when the capital markets shut down on them (not unlike LVLT's purchase of near-profitless revenues to meet the increased covenants on their own bank loans for another 12 months... then they are toast, in some respects, since I don't think there's any way LVLT will generate sufficient levels of true revs from bandwidth sales, by that point in time, to meet the increasing covenants... but they have time to work out their own 'ultimate solution' with the banks and bondholders)... for Q, what I mean is that the bank loan they just grabbed is only for a year, so maybe the credit markets open back up to Q within that time frame, but maybe not. Perhaps the music just keeps going a while longer before they too must undergo radical restructuring of their debt and assets.
