Lumos fiber-enabled cell sites rise to 673 in Q2, reconfirms year-end target of 825 total sites

Lumos Networks continued to make progress with its fiber to the cell (FTTC) buildout strategy in the second quarter, connecting 673 wireless cell sites, up 40 sequentially, which represents about a 45 percent year-over-year increase in total FTTC sites.

Second-quarter FTTC and transport revenues were $5.04 million and $11.2 million, up from $4.6 million and $10.9 million from the first quarter of 2014, respectively.

Following the momentum it made in the second quarter, the service provider reiterated its guidance of reaching 825 FTTC sites by the end of the year and selling 500 to 700 unique and second FTTC circuits during 2014. The telco added that it is also on target to reach 1,500 FTTC sites within the next few years.

"Our FTTC operations continued its strong performance, growing 8.5 percent sequentially and surpassing $5 million in quarterly revenues. We see a strong pipeline for both FTTC sales and installations for the rest of 2014," said Tim Biltz, president and CEO of Lumos Networks, in the earnings release.

Another element that will expand Lumos' wireless backhaul ambitions is its Project Ark initiative, an 850-mile MEF certified Carrier Ethernet MPLS/IP network overlay designed primarily for FTTC traffic. Lumos said that Project Ark is set to be completed in the third quarter and it expects to begin migrating fiber bandwidth traffic onto the Ark in the fourth quarter.

Besides FTTC, the service provider continued to expand its fiber network into more data centers, while furthering the reach of its fiber route miles and on-net building footprint. During the quarter, the service provider added nearly 80 fiber route miles, all of which were constructed and owned by Lumos, ending the period with a total 7,550 route miles. In addition, the company added 33 on-net buildings in the quarter to reach 1,420.

On the data center front, Lumos connected its fiber facilities to Peak 10 in Richmond, Va., its fourteenth data center, and said it is close to meeting its target to connect 20 centers by the end of the year.

Its move to expand its fiber footprint in Richmond is paying off. As of the end of the second quarter of 2014, Lumos' 110-mile fiber market in Richmond had annualized enterprise and transport sales bookings of approximately $4.2 million.

Lumos said in the earnings release that as enterprise bandwidth traffic moves increasingly into the cloud, the company believes that this segment will constitute an increasingly large percentage of total enterprise revenue.

Despite the aggressive fiber rollout, enterprise data revenue declined slightly to $10.4 million from $10.6 million in the first quarter.

Biltz said the goal is for "accelerated growth in 2015 due to the following initiatives: new customer renewal and retention programs, increased reach of our Carrier End User distribution channels, and the connection to more commercial data centers."

Total second-quarter company revenue was $50.2 million, down from $52.3 million year-over-year from the second quarter of 2013 and sequentially from $50.1 million in the first quarter of 2014. Likewise, total adjusted EBITDA in the second quarter of 2014 was $22.7 million, compared to $24.6 million in the second quarter of 2013 and $22.6 million in the first quarter of 2014.

Looking toward the full year 2014, Lumos is maintaining its guidance for revenue of about $200 million and adjusted EBITDA of about $90 million.

Shares of Lumos closed at $14.56, down 45 cents or 3 percent, in Thursday trading on the Nasdaq stock exchange.

For more:
- see the earnings release

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

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