EQT Infrastructure Acquires Lumos Networks: 10X EBITDA Valuation
EQT Infrastructure has acquired Lumos Networks for roughly $950 million, a valuation of just over 10 times Lumos’s annual adjusted EBITDA expectations. The deal comes roughly three months after Lumos hired UBS Investment Bank to pursue strategic alternatives for the company’s regulated assets — jargon that essentially says, “we’re up for sale.”
EQT is a private equity firm that has deep IT expertise. The company has a strong track record for growth-oriented deals. During EQT funds’ ownership, the companies have:
- An average annual growth of 8%
- An average annual earnings growth (EBITDA) by 12%
- Its number of employees increased by 10%
Lumos Networks is a fiber-based service provider in the Mid-Atlantic region serving carrier, enterprise and data center customers. The company’s footprint extends across Virginia, Pennsylvania, West Virginia, Maryland, Ohio and Kentucky.
Lumos Networks has 9,204 fiber route miles and 475,507 total fiber strand miles, 36 data centers, including seven company owned co-location facilities, the company said. In 2015, Lumos Networks generated over $114 million in data revenue over its fiber network, the company reported.
Lumos Knows M&A, Too
Lumos Networks is no stranger to M&A activity. Recent Lumos acquisitions included:
- DC74 Data Centers for roughly $23.5 million to $28.5 million, or roughly 8x to 10x adjusted EBITDA in 2016. More than 80 percent of DC75’s revenues were derived from co-location, bandwidth and cross-connects with the remainder from managed services and managed hosting at its three data centers, the companies said earlier this month.
- Clarity Communications Group, which operates a 730 mile fiber network with 75 on-net locations with the vast majority of its operations in the state of North Carolina. I don’t believe financial terms for that deal were disclosed.
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