Lightpath has long been a market leader in the New York Metro with tens of thousands of on-net buildings and over 20,000 miles of fiber throughout the region. In late 2020, the company completed a spin off from parent company Altice USA. That ushered in a new phase of expansion and new market entries including Boston and Miami. So what is next for the next-generation infrastructure company? CEO Chris Morley, an industry veteran who spent eight years at Zayo during the height of the consolidation wave, recently sat down with Telecom Ramblings to talk about the company’s plans and intentions

Morley joined Lightpath in January of 2021 after Morgan Stanley bought a 49.9% ownership interest in the business. While Altice continues to retain a 50.1% ownership interest, the entrance of Morgan Stanley enabled a deeper focus and investment to transform Lightpath, extending the reach around customer engagement, as well as geographic network coverage. A new leadership team was brought in (including Morley) that had a strong track record in this space and was well-experienced to accelerate growth and value to the business and Lightpath’s customers.

Morley immediately saw Lightpath as a hidden jewel. Lightpath’s NY Metro density and reach were extraordinarily compelling and the partnership with Altice and Morgan Stanley set the stage for a renewed desire to invest, and deploy capital to extend in-market reach, as well as enter into new geographies. 

Lightpath’s investment thesis is to identify markets that they think have the combination of attractive customer demand and growth, paired with the right competitive environment. Over the course of time, in several tier-1 markets, a single dominant competitive fiber provider has emerged via consolidation. The company saw opportunities for an agile, smaller competitor like Lightpath to come in, deploy network, and create an alternative provider of choice. Boston had those attributes, as did their more recent expansion into Miami, as well as additional expansion opportunities within the original NY Metro Lightpath footprint. 

Manhattan and Queens were sizable, addressable markets where the company made significant investments. Over the last two years, Lightpath has taken a very aggressive approach to extending the business geographically coupled with driving more share across its customer base.

Out-of-franchise expansion was historically unconventional for Lightpath, but the new leadership team brought extensive experience entering, building, constructing, developing, and monetizing networks in these types of geographies. The Boston and Miami expansions required the development of new capabilities including new go-to-market plans, sales teams, network placement strategy, and construction capabilities.

Boston Development

The company has currently deployed around 200 route miles of network and recently crossed a milestone of selling their 200th customer and 200th on-net location. That initial market entrance followed with a major expansion, extending out west from Boston along the Mass Pike toward Marlborough, hitting several attractive markets along the route. After the completion of this western expansion, the company will continue to invest and build based on expanding customer needs.

Why Miami?

According to Morley, Miami’s competitive dynamic was attractive to Lightpath for several reasons: 

• Relative to their focus customers, a single provider consolidated most of the competition.
• Miami (and Southeast Florida in general), is growing anywhere between 5-10% on an annual basis which makes it one of the fastest-growing business environments in the country. 
• The addressable market in Miami is about $800 million, very similar in size to Lightpath’s addressable market in Boston, providing a meaningful market opportunity to leverage against their investment. 
• There was a strong synergy in Lightpath’s customer base between Miami and New York with about 20% of the addressable market in Miami having direct overlap with existing and target customers they do business with around the New York metro region. 

“The combination of New York, Boston, and Miami puts Lightpath in three of the top ten US Metro markets, all conveniently on the East Coast, transforming Lightpath from a regional player, into a provider that can address a broader set of our customer requirements,” Morley said.  

The company’s initial deployment in Miami began in the first quarter of 2023, beginning with the central business district with additional builds to the north and to the west planned. The initial deployments encompass 55 route miles and the company has begun the permitting process on the construction of approximately 80 additional route miles. By 2024, Lightpath should have roughly 135 route miles developed, which will allow them to address about a third of the larger Miami addressable market. Overall, Miami is an easy environment in which to construct with more reasonable permitting timeframes. The environment in Miami has been welcoming and Morley believes customers are enthusiastic at the prospect of an alternative provider entering the market. Lightpath plans to extend beyond that through a phased investment cycle.

What’s Next?

Other markets fit the same competitive dynamics that Morley and the company find compelling. Lightpath plans to be in five to seven total markets over the next several years following a deliberate, purposeful approach. 

That said, explains Morley, a brand-new market takes a long time to develop, and a key part of his strategy is to find a way to accelerate entry whether through the acquisition of an existing business, through the identification of underutilized assets that already exist in a market, such as conduits, or through an anchor tenant led build-out. 

Morley on M&A

Morley feels as though he and the new leadership team has as much, if not more, M&A experience than anyone over the last 15 years around the consolidation cycle in the industry with the identification of, execution, and integration of an acquisition as core competencies. That’s part of the reason why the company shifted to a bit of an opportunistic market expansion strategy as they look to extend into new geographies.

While the debt markets were challenged in 2022, Morley sees some glimmers of improvement, but that has limited M&A activity recently. For him, it’s just a case of finding the right opportunity that fits in with Lightpath’s strategy.

Lightpath’s Customer Mix

Historically, Lightpath has been focused on mid-market customers in the enterprise space, with heightened penetration in a few verticals including healthcare, government, and education. Over the past two years, they have extended deeper into the financial vertical and large, strategic enterprises. They have also increased addressability in wholesale, carrier, and wireless, which was well beyond Lightpath’s historical focus. They are also making initial inroads with hyperscalers and content platform customers who tend to be more national buyers.  

Resource Allocation

In his first two years, Morley has been focused on investing in Lightpath’s network, investing in expanding sales and support teams, investing in processes and systems, and investing in attracting talented team members, achieving an initial inflection to growth. The company’s sales bookings activity increased by 85% in 2022 vs. levels prior to undertaking their business transformation, which implies a high, single-digit annual revenue growth rate. Lightpath is still working on improving and scaling operationally to recognize that growth. Morley says he believes there are few companies in the space that are driving that level of growth at a similar scale. Lightpath is creating a unique story in the space. They have the right team to execute on a consolidation play if the opportunity presents itself, and they will continue to look opportunistically at ways to expand to a handful of additional markets, while remaining ultra-focused on an organic strategy and execution in Boston, Miami and the NY Metro operating markets. 

Read the entire interview, here. And to learn more about Lightpath, visit www.lightpathfiber.com and follow on LinkedIn.