Lumos Networks joined the acquisition trend this week by reaching a deal to acquire Clarity Communications for $10 million, a deal that immediately bolsters its fiber network with additional route mile and on-net fiber assets.
By acquiring Clarity, Lumos will gain access to a 730-mile fiber network with 75 on-net fiber locations located across four states in the Southeast. The majority of Clarity’s operations and fiber miles are located in North Carolina, but it also has presence in Georgia and South Carolina.
Tim Biltz, CEO of Lumos, told investors during the third quarter earnings call announcing the deal that Clarity will also further the service provider’s plan to spin out its fiber business as a standalone company.
“Right out of the gate, Clarity brings us into new markets, new verticals and brings us one step closer to having the scale in our data business necessary to create a pure play fiber entity,” Biltz said. “This deal proves our ability to source and close tuck-in acquisition and put capital to work in an effective manner.”
Specifically, the Clarity acquisition will give Lumos entry into the Carrier and Enterprise verticals in various North Carolina markets as well as a new sales channel into various government end markets, including military bases and E-Rate contracts with local schools.
In particular, Lumos will have more opportunities to sell dark fiber to local school districts under the E-Rate program. Under the FCC's E-Rate order issued in 2015, the regulator amended the eligible services list to support the equal treatment of lit and dark fiber services. Local school districts will now be able to purchase either kind of service depending on their specific needs via an FCC Form 470 application.
Seeing an opportunity to pursue new fiber to the cell tower, enterprise and data center deals, Lumos itself began selling dark fiber in May 2015.
Set to close in the first quarter of 2017, Lumos said that the Clarity acquisition reflects its vision to efficiently expand its fiber footprint into new markets and verticals.
Upon closing, Clarity’s founders Todd Peverall and Andy Carwile founders will join Lumos. The service provider did not reveal what their roles in the new company would be.
Biltz said that the existing Clarity team “will be able to cross-sell their vertical expertise across our entire footprint over the 9,200 miles, which includes significant military and E-Rate opportunities.”
The acquisition appears to be a good fit for Lumos in that Clarity already provides a similar set of Ethernet transport, wavelengths, Dedicated Internet Access and dark fiber services.