Neutral Tandem provides the infrastructure to telecom companies to connect to each others networks. The company offers an alternative to the traditional ILEC tandem services and it operates in specific geographic markets. Revenue is earned through the number of minutes the carrier actually uses as it connects calls through Neutral Tandem’s infrastructure.
The company has over $100 million in unrestricted cash and very little long-term debt. Capital expenditures will continue to be high as the company expands into 25 new markets in 2008. However, management has affirmed that 2008 will likely be the peak of capital expenditures with roughly $23-25 being spent to roll out the platform and technology necessary to serve these markets. While there will still be significant spending in 2009, the growth should begin to level out.