Lumos Networks buys North Raleigh Firm

Virginia-based fiber service provider Lumos Networks Corp (Nasdaq: LMOS) is buying north Raleigh fiber firm Clarity Communications Group – a move that gives it an automatic foothold in North Carolina, company execs said Wednesday.

Lumos CEO Timothy Biltz and Clarity CEO Todd Peverall say in an interview that deal talk began when the pair bumped into each other at a trade show in Washington, D.C. But Peverall and his team had been on Biltz’s radar for some time.

“We’ve definitely heard about Todd and what they’ve been doing,” Biltz says.

“Looking at our network and looking at all that Lumos had accomplished in Virginia and further north, we just seemed to be a natural piece of their puzzle as they moved into North Carolina,” Peverall says. “I guess when you go through this process, you look at your options. But as soon as we met with the Lumos team, we knew right away the culture they have created there would match the culture we have at Clarity.”

Biltz, who calls the deal a “growth deal” and not a “synergy deal,” says the plan is to keep the current team in place and eventually expand it, particularly when it comes to technical talent. Priority one will be talking to existing customers – both in the Lumos and Clarity portfolios “and find out where they want to go.”

Biltz anticipates putting much of the growth focus on eastern North Carolina where Clarity has built a dense footprint. And he says it will be calculated, with expansions coming out of conversations with carrier and enterprise customers – “we tend to do things not on spec.”

He does expect Peverall’s team to soon move into a new office in Raleigh, however.

Peverall describes Clarity, which has nine employees, as the “underlying provider” for larger carrier networks getting into North and South Carolina.

“[Customers] come in on larger networks, but they need to get to the actual customer,” he says. And that’s where Clarity comes in, connecting those networks to customer footprints and military networks in North Carolina.

Clarity, according to an investor presentation, has a North Carolina-focused 730-mile fiber network. Lumos already offers end-to-end connectivity in 24 markets in Virginia, Pennsylvania, West Virginia, Maryland, Ohio and Kentucky and has a fiber network of more than 9,200 fiber route miles.

The deal, according to Lumos, provides an immediate new government sales channel and gives Lumos an automatic foothold when it comes to North Carolina’s data center market – and that’s a big selling point for Biltz.

Specifically, Lumos told investors Wednesday in a presentation that it’s expecting a $44 million addressable market once the companies are combined for military facilities and $88 million in non-military opportunities near Clarity’s footprint. Lumos announced $51.8 million in third quarter revenue this week.

The deal is expected to close in the first quarter of 2017. Financials were not disclosed.

Lumos was trading for $14.52 early Wednesday, up more than 2.5 percent.

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Lumos Networks provides fiber internet, voice, and IP connectivity over a dense fiber-based network serving enterprise and carrier customers in areas around and including Roanoake, VA, Richmond, VA, Daleville, VA, Waynesboro, VA, Hampton Roads, VA, Virginia Beach, VA, Lynchburg, VA, Charleston, WV, Huntington, WV, Beckley, WV, Parkersburg, WV, Clarksburg, WV, Morgantown, WV, Wheeling, WV, Pittsburgh, PA, Harrisburg, PA, Altoona, PA, Hagerstown, MD, and Washington, D.C.