Electric Lightwave becomes a standalone fiber provider as Integra splits businesses

Electric Lightwave's western U.S. long-haul network and POPs.

Electric Lightwave is reasserting its brand as parent Integra Telecom Holdings is splitting itself into two standalone businesses -- Electric Lightwave and Integra -- to challenge West Coast telcos and fiber-centric providers like Zayo.

Under the new structure, the parent company has created dedicated personnel, customers and infrastructure for Electric Lightwave and Integra, and each business will have separate operating and financial metrics going forward.

After the split is complete, about 17 percent of current employees will be day-to-day employees of the Integra business, and will leverage certain Electric Lightwave corporate functions (e.g., finance/accounting, legal, HR, technology) through intracompany service arrangements.

This development should be of no great surprise. In early 2015, Integra brought back the Electric Lightwave brand, one it acquired nearly a decade ago, but the network was mainly used as a backhaul mechanism for Integra’s small to medium business (SMB) customers.

By splitting the company in two, Electric Lightwave can focus on its more profitable higher end customer base of enterprise customers, including government and education organizations, and to its growing base of wholesale service provider customers in the wireless segment. This group is also using and expanding the growing set of long-haul and metro fiber assets located in the western U.S. to support this segment.

To illustrate the company’s growing fiber-centric focus, the corporate entity which owns the Electric Lightwave and Integra operating entities will be renamed Electric Lightwave.

Former tw telecom and Level 3 executive Marc Willency will serve as the CEO of Electric Lightwave. Willency joined the company last August, taking over the reins from Robert Guth, who was serving as the company's interim leader.

Willency told FierceTelecom in an interview that the split will further establish itself as a West Coast fiber provider competitor.

“This should establish Electric Lightwave as the standalone fiber services company in the West and Integra will continue to operate as a separate business under Electric Lightwave,” Willency said. “We believe this will help accelerate our strategy to further focus our investment and resources to leverage the network assets on the West Coast.”

Willency added that “the Electric Lightwave team has done a remarkable job really reestablishing our brand presence in our fiber-based markets and we see tremendous opportunity and additional growth in these markets.”

Through a mix of organic builds and strategic acquisitions, including opticAccess, the company has built a network that consists of over 3,300 on-net buildings fed by 9,400 miles of its own fiber.

Dan Stoll, president of Electric Lightwave, said it continues to expand its on-net fiber building footprint to address a mix of data center and business customers.

“We have implemented just shy of lighting 500 new buildings on our network, which is about a 40 percent increase,” Stoll said. “Looking at 2016, we’re looking to fund 650 buildings so we’re seeing continued momentum and growth and our sales activity is up by 40 percent.”

Stoll added that Electric Lightwave’s fiber-based sales “have grown by 50 percent if you compare the first half of last year to the first half of this year.”

As it continues to expand its fiber network, a key focus will be on driving further innovations for its Ethernet services, including a yet to be announced on-demand feature.

Although Stoll could not provide a specific timeline, the feature reflects similar offerings AT&T and Level 3 provide to their retail and wholesale Ethernet customers.  

“Ethernet is a very broad term, but how we’re going to deliver services and provide a bandwidth on demand play with a security play is going to be real we’re going to be launching this year,” Stoll said.  

Retaining its focus on serving small to medium business (SMB) customers, Integra will continue to operate its competitive and incumbent operations in Minnesota, North Dakota and Colorado. In addition, Integra will continue to manage all small business customers throughout all Electric Lightwave markets.

Integra will be led by Brady Adams, senior vice president and general manager of Integra, who previously served as CEO of opticAccess which the company acquired in October 2015.

Additionally, Electric Lightwave announced changes to its board of directors. Under the new structure, Bob Guth has been named executive chairman. Also joining the board will be FairPoint CEO Paul Sunu, who will serve as vice chairman as well as chairman of the audit committee, and Jesse Selnick, CFO of Integra, has been elected to the board.

Electric Lightwave is not the only service provider looking to separate its CLEC and fiber-centric business segments.

Lumos Networks, for one, is in the process of splitting its legacy telecom assets to become a standalone fiber-based provider to businesses and carriers. Similar to Electric Lightwave, Lumos has been actively expanding its network through organic builds to satisfy a mix of fiber to the tower (FTTT), data center and business customers.

Splitting the two companies up also could make Electric Lightwave and Integra attractive acquisition targets.

Some of the potential suitors could be Lightower and Birch. Lightower, which has been growing its footprint on the East Coast and Midwest could see the Electric Lightwave assets to gain an entrée into the West Coast fiber market. Birch, which has been growing its presence through a series of tuck in acquisitions, might find Integra an attractive asset to deepen its SMB presence in the markets where Integra operates today.

However, it appears that Electric Lightwave sees itself as a consolidator of West Coast fiber assets.

“When we think about what the market looked like five or six years ago in the West it looked a lot like what the East looks like today with 9 or 10 providers all competing for roughly the same space in our footprint,” Stoll said. “Through acquisition and evolution, there are fewer and those fewer are managing networks on a national and global level and that’s creating a ton of opportunity to offer our customers something they can’t get elsewhere.”

For more:
- see the release

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