Lumos cites growing sales pipeline for Virginia Beach submarine cable landing site

Part of Lumos' Virginia network including its Norfolk/Hampton Roads expansion and area data centers. Image: Lumos / Google Maps

Lumos has expanded its sales pipeline from prospective carrier customers seeking diverse dark and lit fiber routes from the Virginia Beach undersea cable landing site into Richmond, Virginia, and Ashburn, Virginia, a major data center hub. 

Building new fiber routes into Richmond and Ashburn makes sense for Lumos as it put it into a position to help carriers deal with a surge in bandwidth demand going through the landing site to Ashburn and other key East Coast data center destinations. Lumos expects that about “70% of global Internet traffic passes through Ashburn."

Tim Biltz, CEO of Lumos, said in a release that what it can give prospective carrier customers network diversity because their routes bypass the congested fiber routes located along highway I-95.

“These routes are vulnerable to disruption of services due to the lack of diverse north/south routes,” Biltz said in a release. “Therefore, we expect strong demand for one of our planned routes, which would provide a geographically diverse alternative to the crowded route along the I-95 corridor in order to guarantee mission critical demand traffic to Ashburn, Virginia.”

Biltz added that it is in a good position to pursue additional opportunities from other planned undersea cables coming into the site because Lumos’ network is located less than a half-mile from the Virginia Beach landing site.

“Of these scheduled cables, we estimate that the two Telefonica cables, the MAREA Cable (also funded by Microsoft and Facebook) and the BRUSA Cable, could begin carrying traffic in the third quarter of 2017 and the second quarter of 2018, respectively,” Biltz said. “We believe their landing will set precedence and act as a catalyst for bandwidth demand coming into the landing site.”

While the service provider announced its fourth quarter earnings today, the telco did not hold a call to discuss the results due to being in the middle of being acquired by private equity firm EQT.

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Here’s a breakdown of Lumos’ key metrics:

Data revenue: For the fourth quarter, Lumos reported Data revenue of over $31.6 million, up over 6% year-over-year. Total combined fourth quarter fiber to the cell tower (FTTC) and Enterprise revenue was over $23.5 million, up nearly 19% year-over-year. Combined FTTC/Enterprise constituted over 74% of total Data revenue versus 66% in the prior year, of which approximately 95% tied to Ethernet and other advanced fiber technologies.

Lumos reported total 2016 Data revenue of $123.6 million, up over 8% year-over-year. Total combined Fiber to the Cell (FTTC) and Enterprise revenue of nearly $89 million, up nearly 20% year-over-year.

Residential and Small Business (RS&B): In the residential and small business segment, Lumos reported revenues were $15.5 million, down from $15.9 million in the third quarter.

The service provider reported varying degrees of losses and additions across its voice, broadband and video offerings.

Similar to earlier quarters, Lumos reported that competitive voice connections and video subscribers declined. The service provider lost 2,799 competitive voice connections, ending the quarter with a total of 65,285 connections, while losing 10 video subscribers.

However, the service provider made progress with fiber to the premises (FTTP) broadband, adding 665 connections during the quarter to end the period with a total of 8,972 connections. At the same time, Lumos passed an additional 191 sites with fiber during the quarter.

RLEC Access: Fourth quarter RLEC Access revenue was $4.8 million, up sequentially from $4.5 million in the third quarter.

Fiber growth: Fiber expansion continued to be a theme in the fourth quarter as the service provider reached 1,304 unique fiber to the cell tower (FTTC) sites, up nearly 19% year-over-year. At the end of 2016, Lumos had a total of 1,659 FTTC connections, up over 15% year-over-year.

Lumos also made progress in bringing fiber to business locations, adding 47 lit enterprise buildings in the quarter to reach 2,031, up over 17% year-over-year.

In 2016, added 1,505 fiber route miles with an average strand count of 71. Lumos also increased its average fiber strand count of 49 across its footprint, up nearly 9% year over year.

Financials: Lumos reported $206.9 million in total revenue, up over 1% year-over-year. However, operating revenue declined nearly 19% to $29.6 million.