Lumos Networks to buy Clarity Communications, divest regulated business

Fiber-optic network services provider Lumos Networks Corp. (NASDAQ:LMOS) announced that it will soon get both bigger and smaller. First, it announced an agreement to buy fellow network operator Clarity Communications Group. Then it said it has hired UBS Investment Bank to help explore "strategic alternatives" for the company's regulated local exchange carrier (LEC) business.

Fiber-optic network services provider Lumos Networks Corp. (NASDAQ:LMOS) announced that it will soon get both bigger and smaller. First, it announced an agreement to buy fellow network operator Clarity Communications Group. Then it said it has hired UBS Investment Bank to help explore "strategic alternatives" for the company's regulated local exchange carrier (LEC) business.

Clarity operates a 730-mile fiber network with 75 on-net locations in four Southeastern U.S. states, with North Carolina the home of the majority of these assets. Lumos did not reveal terms of the deal, which the company expects to close during the first quarter of next year.

"Clarity, led by founders Todd Peverall and Andy Carwile, gives us an instant foothold within the carrier and enterprise verticals in many high growth North Carolina markets and gives us a new sales channel into various government end markets, including military installations and e-rate," explained Timothy G. Biltz, CEO of Lumos Networks. "Clarity will be a contributing factor in Lumos achieving the necessary scale needed to become a pure play fiber bandwidth infrastructure company."

Meanwhile, the decision to seek alternatives for the LEC business came after a significant period of study, according to Bitz.

"During the third quarter, we completed our network separation analysis for our regulated LEC assets," Bitz said. "Not only did we determine that these LEC network assets can be separated, but we initiated physical separation of these assets during the quarter. We believe that a key component of maximizing shareholder value will be creating optionality with respects our regulated LEC assets as it furthers our publicly stated goal of becoming a pure play fiber bandwidth infrastructure company."

The company did not offer a prediction for how long the exploration process would last.

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