Lumen Technologies to Sell Consumer Fiber Business to AT&T for $5.5 Billion, Focusing on Enterprise AI Solutions

Lumen Eyes $6B Sale Of Consumer Business To AT&T Amid Turnaround Plan

'We are sharpening our focus on enterprise customers,' Lumen CEO Kate Johnson says. Lumen Technologies aims to push further into enterprise technology with a $5.75 billion cash sale of its 11-state mass market fiber-to-home business to AT&T, a deal set to close in the first half of 2026. The Monroe, Louisiana-based telecommunications vendor will retain the core infrastructure used for enterprise customers, according to a statement Wednesday. AT&T will get about 95 percent of Quantum Fiber, about 4 million fiber locations and about 1 million subscribers. Lumen will keep enterprise fiber customers and mass market copper-based customers. "We are sharpening our focus on enterprise customers, and this transaction enhances our financial flexibility, enabling us to reimagine networking for enterprises in a multi-cloud, AI-first world," said Kate Johnson, president and CEO of Lumen, in a statement. She added that "Lumen has a once-in-a-generation opportunity to build a digital networking company that will serve the needs of enterprise customers. Today, that's in support of AI, and on the horizon, it's quantum computing. This strategic decision is grounded in the expansive critical infrastructure we're retaining and the forward-thinking digital future we're building." [RELATED: AT&T CEO Says 'Historical Resilience Of Demand' Around Connectivity Will See Carrier Through Tariffs] AT&T Buys Lumen Business For AT&T, the deal expands the communities the vendor serves and the number of AT&T Fiber subscribers, who will be migrated from Lumen "over time," the company said in a statement Wednesday. The company aims to double AT&T Fiber availability by the end of 2030, reaching 60 million total fiber locations. "We're leading the race to connect more Americans with fiber, the best broadband connectivity technology available," said John Stankey, AT&T's chairman and CEO. "This deal with Lumen represents a significant investment in U.S. connectivity infrastructure that will create jobs and spur economic activity in numerous regions and major metro areas." CRN has reached out to Lumen and Dallas-based AT&T for comment. Lumen's 2025 channel goals include increasing the overall percentage of company revenue that comes through the channel and increasing partners' customer satisfaction ratings, according to CRN's Channel Chiefs. AT&T's 2025 channel goals include improving partner profitability and increasing the amount of net new accounts coming through partners, according to CRN's Channel Chiefs. The deal expands AT&T's footprint in Florida, Denver, Las Vegas, Minneapolis, Phoenix, Salt Lake City and other areas, according to the company's Wednesday statement. The vendor doesn't expect the deal to have a material impact to its earnings before interest, taxes, depreciation and amortization (EBITDA) and free cash flow in the 12 to 24 months after the deal closes. But it should be accretive in the long run, and AT&T maintains its full-year 2025 financial outlook. In April, the vendor reported total operating revenue for the first fiscal quarter of $30.63 billion, an increase of 2 percent from $30.03 billion in the same quarter one year earlier. AT&T expects to get access to Lumen's fiber construction capabilities in its incumbent local exchange carrier (ILEC) footprint and accelerate fiber building pace. The vendor also plans to offer 5G wireless and fiber broadband connectivity within the new fiber footprint to increase its base of converged customers and drive gains in the mobility business. AT&T will form a subsidiary called NetworkCo to hold the purchased fiber network deployment capabilities and assets. The vendor wants to eventually sell part of NetworkCo to an equity partner that will co-invest in the business. AT&T plans to identify that equity partner and close a deal in about 6 to 12 months after the Lumen deal closes. NetworkCo will operate as a wholesale commercial open access platform with fiber access services to AT&T as the anchor tenant. Lumen mass markets fiber customers will stay with AT&T. Lumen will give AT&T field operations, network deployment, IT system, billing, customer support and other services for about two years after the deal closes to help with the transition. Lumen Pays Down Debt Lumen expects to net about $4.2 billion from the deal and use that money plus cash on hand to pay down superpriority debt of about $4.8 billion. This will reduce its interest expense by about $300 million a year and reduce its net debt to earnings ratio, according to the statement. During last year, the vendor reduced its debt load by $1.6 billion and completed a $15 billion debt modification, one of the largest private debt restructurings of its kind. The vendor also expects to save about $1 billion a year by selling the mass markets business. Lumen is committing to "a similar pace" of year-over-year fiber enablement buildouts through the end of 2025. Lumen plans to reach 47 million intercity fiber miles by 2028 and continue scaling its Lumen Digital platform for business networking services. Lumen will keep its national, regional, state and metro level fiber backbone network infrastructure, central offices and associated real estate-all of which the vendor will leverage for serving enterprises. All Lumen enterprise and wholesale fiber customers stay with the vendor. Lumen will also retain and care for its existing copper network, which is mostly for consumer customers. Earlier this month, Lumen CEO Johnson told CRN about pivoting away from traditional telecommunications services. "Leaning into where everybody inside of an industry that hasn't innovated in a long time is skating to is probably the wrong orientation," she said. "We are pivoting, and we are maniacally focused on our customer success, and we define our success and our transformation as to whether or not we served the companies that we do business with and helped them be successful. And what we're hearing from them is that the networks of yesterday don't serve this multi-cloud, AI-first world." The vendor reported first fiscal quarter earnings May 1, revealing total revenue of $3.18 billion, which represented a decline of 3.3 percent compared to $3.29 billion in the year-ago period. The company reported a net loss of $201 million for its most recent quarter, compared to net income of $57 million for the same period a year before. Lumen's stock traded at about $4 a share Wednesday after market close, up about 11 percent. AT&T's stock was about flat at around $28 a share.

Lumen Technologies Advances Enterprise Market Focus with Sale of Consumer Fiber-to-the-Home Business to AT&T By Investing.com

DENVER--(BUSINESS WIRE)--Lumen Technologies, Inc. (NYSE: LUMN) today announced it has entered into a definitive agreement to sell Lumen's Mass Markets fiber-to-the-home business, including Quantum Fiber, in eleven states to AT&T (NYSE: T) for a total of $5.75 billion in cash, subject to working capital and other various purchase price adjustments. The transaction marks another important, bold step in Lumen's transformation into the leading enterprise digital networking company. This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20250521551098/en/ We are sharpening our focus on enterprise customers, and this transaction enhances our financial flexibility, enabling us to reimagine networking for enterprises in a multi-cloud, AI-first world, said Kate Johnson, president and CEO of Lumen. As part of this deal, we are retaining the core infrastructure that allows us to continue innovating for enterprise customers, leap frogging traditional networking architectures to give customers the bandwidth, performance, and security they need. The fiber-to-the-home business being sold is tremendously valuable thanks to the incredible work by the team and will now have even greater opportunity to grow with AT&T's scale, consumer-focus, and investment. AT&T's acquisition includes approximately 95% of Quantum Fiber, approximately four million enablements, and nearly one million subscribers as of March 31, 2025. Based on first quarter 2025 results, these customers would generate over $750 million of annualized revenue. Lumen expects to build out new fiber enablements at a similar pace as 2024 through year end 2025. Importantly, Lumen will retain assets that will continue to serve as the foundation of its enterprise transformation, including all national, regional, state, and metro level fiber backbone network infrastructure, central offices and associated real estate. The enterprise and wholesale fiber customers will remain with Lumen in all geographies. In addition, Lumen will retain and care for its existing copper network, which primarily services consumer customers. Upon closing, Lumen intends to use the net proceeds of approximately $4.2 billion and cash on hand to pay down approximately $4.8 billion in superpriority debt, reducing our interest expense by approximately $300 million annually. Based on projected 2025 aEBITDA guidance, Lumen's net debt to aEBITDA ratio will be reduced from 4.9x to 3.9x. The transaction is expected to reduce Lumen's Mass Markets fiber-related capital expenditures by approximately $1 billion annually, enhancing cash flow and enabling Lumen to accelerate investments in the Company's enterprise offerings and further strengthen the balance sheet. Following the $8.5 billion in AI-driven networking contracts with hyperscalers, Lumen plans to expand its vast nationwide footprint, scaling to 47 million intercity fiber miles by 2028. In addition, the Company will continue to scale the Lumen Digital platform to simplify customer experiences for businesses seeking quick, secure, effortless networking services. Lastly, Lumen will strategically leverage the combination of its physical infrastructure and digital platform to deliver increased performance, capacity, intelligence and security through new, innovative network architectures such as Direct Fiber Access (DFAs), Cloud On-ramps, and Multicloud Gateways. Added Johnson, Lumen has a once-in-a-generation opportunity to build a digital networking company that will serve the needs of enterprise customers. Today, that's in support of AI, and on the horizon, it's quantum computing. This strategic decision is grounded in the expansive critical infrastructure we're retaining and the forward-thinking digital future we're building. The transaction is expected to close in the first half of 2026, subject to any necessary approvals and closing conditions. Lumen's financial advisors are Goldman Sachs & Co. LLC and JP Morgan Securities LLC. Lumen's legal advisor is Latham & Watkins LLP. FTI Consulting and Teneo served as strategic advisors to Lumen. Investor Call Lumen's management team will host a conference call at 4:30 p.m. ET today, May 21, 2025. The conference call will be webcasted from our Investor Relations website at ir.lumen.com. Additional information will be available at lumen-forward.q4ir.com. About Lumen Technologies Lumen Technologies, Inc. (NYSE: LUMN) is unleashing the world's digital potential. We ignite business growth by connecting people, data, and applications " quickly, securely, and effortlessly. As the trusted network for AI, Lumen uses the scale of our network to help companies realize AI's full potential. From metro connectivity to long-haul data transport to our edge cloud, security, managed service, and digital platform capabilities, we meet our customers' needs today and as they build for tomorrow. For news and insights visit news.lumen.com, LinkedIn: /lumentechnologies, X: @lumentechco, Facebook:/lumentechnologies, Instagram:@lumentechnologies, and YouTube: /lumentechnologies. Forward Looking Statements Except for historical and factual information, the matters set forth in this release identified by words such as expects, anticipates, will, plans and similar expressions are forward-looking statements as defined by the federal securities laws, and are subject to the safe harbor protections thereunder. Statements in this release concerning (i) the Company's expected future financial position, results of operations, cash flows, financing plans, business strategy, budgets, capital expenditures, competitive positions, growth opportunities, plans and objectives of management and (ii) the transactions proposed in the agreement, including the pre-closing internal restructuring contemplated by the agreement, the expected benefits of the transactions proposed in the agreement, including with respect to the business outlook or future economic performance, anticipated profitability, revenues, expenses or other financial items, and product or services line growth, the closing date of the transactions proposed in the agreement, plans following the closing of the transactions proposed in the agreement, are forward-looking statements that are estimates reflecting management's best judgment based upon currently available information. Such forward-looking statements are inherently uncertain, and stockholders and other potential investors must recognize that actual results may differ materially from expectations as a result of a variety of factors, including, without limitation, those discussed in the Company's Annual Report on Form 10-K for the year ended December 31, 2024, and in the Company's subsequent Quarterly Reports on Form 10-Q and Current Reports on form 8-K, each as filed with the Securities and Exchange Commission. Such forward-looking statements are based upon management's current expectations and include known and unknown risks, uncertainties and other factors, many of which the Company is unable to predict or control, that may cause actual results, performance or plans to differ materially from any future results, performance or plans expressed or implied by such forward-looking statements. We may change our intentions or plans discussed in our forward-looking statements without notice at any time and for any reason. View source version on businesswire.com: https://www.businesswire.com/news/home/20250521551098/en/