2000 a Watershed Year for CLEC Industry; Industry Revenues to Grow By Over 350% During The Next Five Years, Says The Strategis Group

Apr 03, 2001, 01:00 ET from The Strategis Group, Inc.

    WASHINGTON, April 3 /PRNewswire/ -- The plunging stock prices, huge
 operating losses, job cuts and high-profile bankruptcies that characterized
 2000 took their toll on the CLEC industry.  However, according to a new study
 by The Strategis Group, CLEC Strategies and Market Potential, these events
 also paved the way for a brighter future as capital will now flow more
 efficiently to a select group of strong, well-managed CLECs that have emerged
 from the pack.
     "2000 really separated the wheat from the chaff," states Peter Jarich,
 director of broadband research with The Strategis Group.  "Companies whose
 business plans essentially called for spending lots of money today in hopes of
 future profits were hammered by plunging market values and a tougher capital
 environment." Strong companies with cash on hand, solid revenues and improving
 operating results, however -- such as XO Communications, TimeWarner Telecom
 and Allegiance Telecom -- continued to attract capital and remain well
 positioned for the future, according to Jarich.
 
     Strong Future
     Driven by increased CLEC presence in local and long distance voice
 services, and continued strength in data services, The Strategis Group
 estimates CLEC industry revenues will grow by 357% over the next five years.
 "Demand for an alternative to the ILEC remains very strong, representing a
 huge opportunity for CLECs whose provisioning, maintenance and customer
 service operations meet customer expectations," says Jarich.
 
     Total CLEC Revenues ($Millions)
 
     2000        12,865
     2001        19,333
     2002        27,696
     2003        38,769
     2004        49,738
     2005        58,781
 
     Source: The Strategis Group, Inc.
 
     "The Real Story"
     According to Jarich, the real story regarding the future of the industry
 is not the great opportunity available, as most expected, but that the number
 of companies sharing in those spoils will be much smaller than today.
 "Diminished access to capital and increased pressure to demonstrate strong
 operating results, combined with the necessity to achieve economies of scale
 and scope, will inevitably lead to consolidation in the CLEC industry," he
 says. "Primarily because of failures and bankruptcies, the CLEC industry will
 ultimately be comprised of a much smaller group of larger and stronger
 companies better able to compete against ILECs and each other."
     A free conference call discussing the findings of the report will be held
 on Thursday, April 12, 2001 at 2:00 p.m. (EDT).  To participate in the
 conference call, please contact Laura Wert at lwert@StrategisGroup.com or
 202-530-7510.
 
     The Strategis Group -- with offices in Washington, D.C., London and
 Singapore -- publishes in-depth industry research reports, provides customized
 consulting services and supplies continuous information solutions to the cable
 TV, satellite, Internet, competitive telephony, broadband and wireless
 communications industries. The Strategis Group's market studies, evaluations
 and strategic planning provide crucial information to communications industry
 leaders throughout the world. Please contact an account executive at
 202-530-7500 (voice), 202-293-7933 (fax) or sales@StrategisGroup.com (email)
 for more sales information.
 
 

SOURCE The Strategis Group, Inc.
    WASHINGTON, April 3 /PRNewswire/ -- The plunging stock prices, huge
 operating losses, job cuts and high-profile bankruptcies that characterized
 2000 took their toll on the CLEC industry.  However, according to a new study
 by The Strategis Group, CLEC Strategies and Market Potential, these events
 also paved the way for a brighter future as capital will now flow more
 efficiently to a select group of strong, well-managed CLECs that have emerged
 from the pack.
     "2000 really separated the wheat from the chaff," states Peter Jarich,
 director of broadband research with The Strategis Group.  "Companies whose
 business plans essentially called for spending lots of money today in hopes of
 future profits were hammered by plunging market values and a tougher capital
 environment." Strong companies with cash on hand, solid revenues and improving
 operating results, however -- such as XO Communications, TimeWarner Telecom
 and Allegiance Telecom -- continued to attract capital and remain well
 positioned for the future, according to Jarich.
 
     Strong Future
     Driven by increased CLEC presence in local and long distance voice
 services, and continued strength in data services, The Strategis Group
 estimates CLEC industry revenues will grow by 357% over the next five years.
 "Demand for an alternative to the ILEC remains very strong, representing a
 huge opportunity for CLECs whose provisioning, maintenance and customer
 service operations meet customer expectations," says Jarich.
 
     Total CLEC Revenues ($Millions)
 
     2000        12,865
     2001        19,333
     2002        27,696
     2003        38,769
     2004        49,738
     2005        58,781
 
     Source: The Strategis Group, Inc.
 
     "The Real Story"
     According to Jarich, the real story regarding the future of the industry
 is not the great opportunity available, as most expected, but that the number
 of companies sharing in those spoils will be much smaller than today.
 "Diminished access to capital and increased pressure to demonstrate strong
 operating results, combined with the necessity to achieve economies of scale
 and scope, will inevitably lead to consolidation in the CLEC industry," he
 says. "Primarily because of failures and bankruptcies, the CLEC industry will
 ultimately be comprised of a much smaller group of larger and stronger
 companies better able to compete against ILECs and each other."
     A free conference call discussing the findings of the report will be held
 on Thursday, April 12, 2001 at 2:00 p.m. (EDT).  To participate in the
 conference call, please contact Laura Wert at lwert@StrategisGroup.com or
 202-530-7510.
 
     The Strategis Group -- with offices in Washington, D.C., London and
 Singapore -- publishes in-depth industry research reports, provides customized
 consulting services and supplies continuous information solutions to the cable
 TV, satellite, Internet, competitive telephony, broadband and wireless
 communications industries. The Strategis Group's market studies, evaluations
 and strategic planning provide crucial information to communications industry
 leaders throughout the world. Please contact an account executive at
 202-530-7500 (voice), 202-293-7933 (fax) or sales@StrategisGroup.com (email)
 for more sales information.
 
 SOURCE  The Strategis Group, Inc.