tw telecom (Nasdaq: TWTC) is increasing its addressable market by expanding its metro fiber footprint by 17 percent and hatching a plan to enter what it calls five new "high-demand" markets. It will also increase the density of its metro fiber footprint in 27 existing markets it already serves.
These expansions are designed as a vehicle to extend its portfolio of data and Internet services, particularly Ethernet, to more enterprise customers.
Besides its metro market expansion, the service provider is increasing its regional fiber footprint.
While it did not provide specific details, tw telecom said it has entered into "several agreements" for metro and regional fiber. The service provider added it plans "to recognize these as a capital lease obligation of approximately $120 million in Q4 2013, which will be paid over the initial 20-year lease term."
Overall, tw telecom said it expects to invest about $50 million of capex next year to integrate and connect the expansion into its national network and operational infrastructure. In addition, it will expand the size of its sales force and additional operational employees to support this project.
The service provider's on-net footprint is already quite extensive. As of the end of September, it had a total of 19,648 buildings connected to its fiber network.
"By accelerating the expansion of our existing markets using our established operational teams and infrastructure, as well as entering new cities where our customers already have networking needs, this expansion gives us quick access to current demand and an accelerated path to greater revenue opportunities," said John Blount, tw telecom's chief operating officer, in a release.
The timing of this expansion comes as tw telecom reported that it earned $393.2 million of revenue in Q3 2013, up 1 percent sequentially and 6.6 percent year over year.
As seen in previous quarters, revenue growth was the result of strong enterprise customer results.
Driven by data and Internet services, enterprise revenues rose 8.5 percent, or $25 million. Data and Internet services, particularly Ethernet and VPN based products which represent 55 percent of total revenue for the quarter, rose 14 percent to $215.9 million.
- see the expansion release
- and the earnings release
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