Lumos adds 633 cell sites in Q1, reiterates year-end targets for more fiber to sites

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Lumos Networks reported that its fiber to the cell site (FTTC) business continued to perform well in the first quarter of 2014 as the telco added 633 sites, representing a year-over-year increase in total FTTC sites of 56 percent.

Total FTTC revenues rose to $4.4 million, up sequentially from $4.1 million in the fourth quarter of 2013. The service provider has reiterated its goal to reach 825 FTTC sites by the end of the year and its target of selling 500 to 700 what it calls unique and second FTTC circuits this year. It also maintained its target for 1,500 FTTC sites over upcoming years.

One of the key initiatives Lumos took to accelerate its FTTC business was to select Cisco as its core router supplier for its 850-mile Project Ark Carrier Ethernet MPLS/IP network overlay that's designed primarily for FTTC traffic. The company expects to complete Project Ark in the third quarter of 2014 and begin migrating fiber bandwidth traffic onto the Ark in the fourth quarter.

Besides FTTC, Lumos also raised its target for connecting its fiber to data centers from 20 by the middle of 2015 to 20 by the end of 2014. Lumos cites the data center connectivity opportunity as a major growth area, particularly as more enterprises move their traffic into the cloud.

Supporting these initiatives is its growing fiber network. During the quarter, the service provider added 53 fiber route miles and now has a fiber route mile network of 7,467. In addition, Lumos added 43 on-net buildings in the quarter to reach a total of 1,387.

The company said it is on track to complete a 53-mile long-haul route from Richmond to Charlottesville, Virginia, by the second quarter.

Despite its gains, the service provider still saw softness in its Enterprise Data and Transport segments, which declined sequentially to $10.5 million and $11.1 million from $10.6 million and $12.1 million, respectively.

Total company revenue was $50.1 million, down from $52.5 million in the first quarter of 2013 and $51.0 million in the fourth quarter of 2013. Likewise, total Adjusted EBITDA in the first quarter of 2014 was $22.6 million, compared to $24.7 million in the first quarter of 2013 and $24.0 million in the fourth quarter of 2013.

"Our focus is to keep operating costs roughly flat in 2014 versus 2013. However, our overriding goal is to continue to invest in our fiber infrastructure in the form of Project Ark, with the booking of approximately 500-700 new FTTC circuits and an aggressive expansion of data center connectivity," said Tim Biltz, CEO and President of Lumos Networks, in the earnings release. "We expect our FTTC revenue growth in 2014 to exceed 40%."

Looking toward the rest of the year, Lumos is revising both its revenue guidance from $200 million to $204 million to approximately $200 million and its Adjusted EBITDA guidance from $94 million to $96 million to approximately $90 million. The telco said it is "temporarily suspending providing long-term goals for annual data growth."

Shares of Lumos were listed at $13.82 in Wednesday morning trading on the Nasdaq stock exchange.

For more:
- see the earnings release

Special report: Wireline telecom earnings in the first quarter of 2014

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