Lumos Networks' strategic data revenues jump to $29.9 million

Lumos Networks (Nasdaq: LMOS) found that its drive to deliver data services continued to bear fruit in Q2 as total strategic data revenue rose to $29.9 million.

A key point of growth during the quarter was carrier data services, particularly carrier transport and Fiber to the Tower services, which were $15.1 million. IP-based services, meanwhile, remained slightly flat at $4.78 million.

As of the end of the quarter, Lumos had a total of 465 towers connected to its fiber network, up 60 percent sequentially. Over the past year, it has added a total of 287 towers connections to its network.

The service provider said it increased its FTTT installation target this year from 550 to 600 and its long-term FTTT target from 1,000 to 1,500.

With more wireless operators expanding their 4G wireless deployments in the next few years, Tim Biltz, CEO of Lumos, said during the earnings call that he expects that the number of clients it serves on each tower site will rise.

"We have approximately 1.4 tenants per fiber-fed tower and over the next several years we will increase to nearly two tenants per tower," he said. "As data capacity requirements continue to increase we believe that we'll see average monthly rents increase from $1,700 to approximately to $2,000 over the next four to five years."

Over the course of the next five years, Lumos expects to continue to grow strategic data services, while seeing ongoing declines in legacy ILEC and CLEC voice revenues.

With a key focus on ramping up on-net customers, telco has set a goal to reach annual growth in the mid-teens for its strategic data product segment and generate about 80 percent of total revenue by 2018. By the end of 2018, Lumos expects that legacy voice revenues will represent 10-15 percent, and access 5 percent, of total revenue.

A major tenet of driving growth will come from its "edge out" strategy, which it began in Q2 with the buildout of a 100G capable network in Richmond, Va., that will go live in Q3 this year.

Biltz said they have already signed five major new customers in the Richmond area and "are now actively marketing for new customers in the market."   

Overall Q2 revenue was $52.3 million, up year-over-year from $50.8 million in Q2 2012 and sequentially from $52.5 million in Q1 2013. The telco's total adjusted EBITDA was $24.6 million, compared to $21.1 million in Q2 2012 and to $24.7 million in the Q1 2013.

Looking forward to Q3 2013, the telco has forecast revenue of about $52 million and adjusted EBITDA of approximately $24 million.

For the full year 2013, the company now expects its revenue to be approximately $208 million lower than its prior guidance of $208 to $212 million and adjusted EBITDA to be about $97 million versus prior guidance of $94 to $97 million.

"This revenue guidance is at the lower end of original guidance range, while EBITDA is at the high end," said Biltz. "The main reason for being at the low end of our guidance revenue range is the lumpy nature of our carrier data business and the slower progress than I had planned from recognizing revenue from our edge out market initiatives."

Shares of Lumos were listed at $18.72, down 23 cents or 1.21 percent in Thursday morning trading on the Nasdaq stock exchange.

For more:
- see the earnings release

Special Report: Wireline telecom earnings in the second quarter of 2013

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Lumos serves up 100G wavelength services
Lumos Networks snags Ethernet contract with HCA Virginia
The rising stars of wireline in 2013
Lumos Networks to build 100G routes in Richmond, Va. metro

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