Lumos expects small cell, dark fiber RFPs to heat up, says Biltz

Lumos Networks CEO Tim Biltz says the company expects to see more requests for proposals (RFPs) from its wireless carrier customers for small cell backhaul and dark fiber.

Speaking to investors during the fourth-quarter earnings call,  Biltz said that through initiatives like its Project ARK fiber-to-the-cell (FTTC) program, the company now has the capabilities in place to respond to various wireless customer requests.  

"In 2015 we expect that RFP activity for both small cell and dark fiber, which have been quite limited in our footprint to date, will begin to heat up and we're well positioned to capitalize on these new areas of growth," said Biltz, according to a Seeking Alpha transcript. "We're in discussions with a number of key carrier and enterprise customers about these new technologies and products."

Biltz added that the company expects the demand for small cell and dark fiber-based backhaul will make up a larger portion of its overall FTTC revenue mix.

"In 2015 and '16, I expect that small cells and macro dark fiber sites will become a larger piece of our FTC mix, although the exact timing is very carrier and customer dependent," Biltz said.

Throughout the past year, Lumos continued to ramp momentum in the FTTC space, selling a total of 753 connections. This surpassed its previous targets of 500 to 700 cell sites and reached nearly $20 million in 2014 in FTC revenue, which was also up from approximately $4 million only a few years ago.

A big contributor to FTTC growth in 2014 was the completion of the core network of its Project Ark initiative, which is specially designed to carry wireless backhaul traffic.

"First, we completed the core network of Project Ark ahead of schedule with traffic routed under this network before year-end '14, leaving us well positioned to reach our target of 100 percent of all sites routed by mid 2015," Biltz said. "Led by the tremendous strength in FTC and carrier-end user, we achieved new data sales bookings of $2.5 million in new monthly re-occurring revenue up over 30 percent and well within our guidance range."

Looking at 2015, the service provider has forecast that the FTTC portion of its business will grow about 45 percent with the expectation that it will install about 500 connections, up from the 33 percent from the 375 sites it installed last year.

If it meets its 500 new connections mark this year, Lumos would have a total of 2,200 FTTC sites under contract with its wireless operator customers.  

"In the calendar year we expect to commence construction on nearly 500 unique FTC sites," Biltz said. "While we expect to continue to aggressively add new unique sites in our footprint in 2015 and '16, an increasing percentage of future FTC revenue should come from bandwidth upgrades and second tenants, neither of which require significant additional capital investment and which provide a tremendous leverage to the model."

Besides completing the core upgrade for Project ARK, Lumos also announced its 115 mile fiber route between Richmond and Ashburn, Va., is now operational for high-speed, low latency connectivity. The service provider said that this new unique route will provide both long-haul networking between these two key cities and Metro/Access rings to offer services to key enterprise, data center and carrier customers.

For more:
- see the Seeking Alpha earnings transcript
- and this release

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