Time Warner Telecom reported increased revenue in its enterprise customer segment, and a narrower loss for the second quarter of 2005, even though carrier revenues decreased.

The competitive service provider reported $174.8 million in revenue, $58.1 million in modified EBITDA and a net loss of $27.2 million.

Most significant in the second quarter was the extension of a long-term deal with AT&T and SBC Communications, which sets up Time Warner Telecom to provide last-mile connections for the merged AT&T/SBC outside SBC’s region through 2010. AT&T and TWT had held a similar agreement since 2001.

“The key take-away there is stability and predictability of revenue from our largest customer, and there exists potential new revenue opportunity as well,” said Larissa Herda, Time Warner Telecom's chairman, CEO and president. “AT&T represents 8% of our total revenue and 21% of our carrier revenue for current quarter.”

Herda said TWT is focused on revenue growth “with healthy margins” in part by developing specialized marketing campaigns to attract more customers in buildings already on its fiber-optic network.

“We have closely managed costs and capital investments to produce strong results with solid margins which we believe will help move us toward our goal of sustainable free cash flow,” she commented.

The company grew revenue by $12 million or 7%, over the second quarter of 2004, and $3.2 million or 2% over the first quarter of 2005. Enterprise revenue was the biggest contributor, growing 18% year-over-year and 5% of $4.8 million sequentially. Much of that spending was in data and Internet services, where revenue was up $10 million or 33% year or year and 9% sequentially. Time Warner Telecom increased the number of buildings served directly by its fiber network by 20% to 5501 as part of that enterprise growth.

The down side was a decrease in carrier revenue by 2% sequentially, due to what Herda called “the lumpy nature of that part of the business.”

The company produced a modified EBIDTA of $58.1 million, a 62% gross margin and a 33% modified EBIDTA margin.

With the impending mergers and TWT’s expansion to more than 5500 buildings, “that makes us the largest non-incumbent provider of fiber-based service,” said Herda. “That is a great strategic position as we further pursue large and medium-sized customers.”

“I’m happy to say we are adding a lot more of the larger customers, where we are getting our foot in the door. Because we are adding so many large customers, it has helped to stabilize our ARPU over the last couple of years.”