Lumos' fiber-to-the-cell site connections rise, but Q3 revenues decline to $50.5M

Lumos' fiber-to-the-cell (FTTC) site momentum continued into the third quarter, with the company reporting that it now has a total of 708 cell sites connected to its fiber network, up 31 percent year-over-year amidst a fall in overall revenues.

The service provider reiterated that it's on track to reach 825 unique FTTC sites by the end of this year and has maintained its guidance to sell 500 to 700 unique and second FTTC circuits this year.

In September, the service provider completed its Project Ark network overlay designed for FTTC traffic. Since then the service provider has begun migrating traffic onto the Ark network and expects that about 20 percent of total FTTC sites will be converted by the end of this year. Lumos said it expects that the "vast majority" of its FTTC traffic will be routed onto the Ark network by the middle of 2015.

Despite the progress it made with its FTTC programs, overall segment revenue declined to $4.74 million from $5.04 million in the second quarter of 2014.  

"While our quarterly FTTC revenue grew 23% year-over-year, it declined sequentially due to a combination of several factors that we view as temporary events," said Tim Biltz, CEO and president of Lumos, in the earnings release. "Therefore, we maintain our target for $20 million in total FTTC revenue in 2014, up around 40% year-over-year and expect strong sequential growth in the fourth quarter within that segment."

Biltz added that: "Our combined FTTC sales pipeline and backlog of booked but not yet installed revenue is the highest in the company's history and we believe we can accelerate FTTC growth in 2015 versus 2014."

One element that is likely going to help Lumos enhance its FTTC revenue base will be planned fiber network expansion in Richmond and Norfolk, Va. As part of that build, the service provider expects to add about 665 miles of fiber.

This network build, which is estimated to be approximately $40 million, is being driven by a newly signed contract with one of the major wireless operators for about 250 FTTC sites in the region. The network expansion will increase Lumos' total route mileage by nearly 9 percent but is expected to increase its fiber strand mileage by over 25 percent due to the significant fiber density planned for this new build.

Over in the enterprise market, Lumos reported that revenues were $10.5 million, up from $10.4 million in the second quarter of 2014.

During the quarter, the telco said it renewed over $206,000 of enterprise monthly recurring charges (MRC) in the third quarter, up nearly 30 percent sequentially. On a year-to-date basis, Lumos has renewed 15 percent of its entire enterprise revenue base with an average contract length of over three years.

From an overall financial perspective, total revenue was $50.5 million, down year-over-year from $51.6 million in the third quarter of 2013 and $50.2 million in the second quarter of 2014.

Looking toward the full year 2014, Lumos is maintaining its financial guidance of $200 million in revenue, while increasing its guidance for adjusted EBITDA to about $100 million, including about $10 million of OPEBs gain recorded in the third quarter.

Shares of Lumos were listed at $16.05, down 16 cents or 0.99 percent, in Friday morning trading on the Nasdaq stock exchange.

For more:
- see the earnings release
- and this release

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

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