KMC says goodbye to CLEC business, hello to IP services

KMC Telecom is exiting the CLEC business, and selling its local service assets to Century Tel and Telcove.

KMC will now focus on wholesaling Internet Protocol services to carriers and large enterprises, the company announced today.

Century Tel is the primary beneficiary of the sell-off, acquiring KMC’s assets in 16 markets in the central U.S. for $65 million. Those assets include 1,000 lit route miles of metro fiber and more than 100 points of presence in Akron, Dayton and Toledo, Ohio; Ann Arbor and Lansing, Michigan; Baton Rouge, Louisiana; Chattanooga, Tennessee; Corpus Christi and Longview, Texas; Eden Prairie, Minnesota; Fort Wayne, Indiana; Huntsville and Montgomery, Alabama; Madison, Wisconsin; Biloxi/Gulf Port, Mississippi; and, Topeka, Kansas.

Also benefiting, however, is a lesser known East Coast CLEC, Telcove, which will add 21 markets to its footprint, including Augusta and Savannah, Georgia; Columbia, Charleston and Spartanburg, South Carolina; Daytona Beach, Ft. Myers, Greater Pinellas, Melbourne, Pensacola, Sarasota and Tallahassee, Florida; Fayetteville, Greensboro, Hickory, Wilmington and Winston-Salem, North Carolina; Hampton Roads and Roanoke, Virginia; Bethesda/Frederick/Rockville, Maryland; and the tri-city area of Bristol/Johnson City/Kingsport Tennessee.

The expansion is a significant one for Telcove, says CEO Bob Guth, because it enables his company to substantially improve its mid-Atlantic and Southeastern coverage without creating overlapping facilities.

“We’ve had our 52 markets of operations with very heavy concentration in the Northeast and less in the Southeast across the Gulf Coast,” said Guth in a telephone interview. “The markets we acquire here make our concentration in the Southeast equal to what we have in the North. If you look at our existing Florida markets and what we are acquiring, for example, there is no overlap, and we end up with the entire state covered. We wanted complementary assets because we are focused on revenue growth and coverage.”

Telcove is a privately held company, based in Pittsburgh, PA. The company had a $270 million revenue stream for fourth quarter of ’04, and an $85 million EBITDA, said Guth.

“We are focused on customers who do need high-quality, high-bandwidth services and we try not to get distracted by customers who view telecom as a commodity,” he said. “That focus drives us to a few specific segments – health care, government, banking and the carrier end of the spectrum, which we do value.”