Company Reports

Lumen's second-quarter revenue declined 9%, or 3% excluding the residential fiber network sale. Enterprise revenue was down less than 2% year over year versus an average decline of 4% in recent quarters. However, Lumen again announced no new fiber deals. EBITDA contracted in line with revenue.

Lumen's first-quarter revenue declined 9%, or 5% excluding the residential fiber network sale to AT&T. Business segment revenue declined 3%, in line with recent quarters. The firm generated $380 million of free cash flow during the quarter but announced no new fiber infrastructure agreements.

Lumen has transformed into a US enterprise-focused company through a series of divestitures, most recently the sale of the bulk of its consumer business to AT&T. The firm's remaining assets are well-positioned to benefit from the surge in demand for communications infrastructure and connectivity, driven by investments in artificial intelligence. This demand has allowed Lumen to monetize fallow network assets, raising much-needed cash. The core network services business remains in decline, however, as the cost of capacity declines amid a tough competitive environment.

Lumen has transformed into a US enterprise-focused company through a series of divestitures, most recently the sale of the bulk of its consumer business to AT&T. The firm's remaining assets are well-positioned to benefit from the surge in demand for communications infrastructure and connectivity, driven by investments in artificial intelligence.

Lumen announced $2.5 billion in connectivity deals during the fourth quarter, bringing the total to $13 billion signed since the program started in 2024. Lumen also completed its fiber sale to AT&T and used the proceeds to pay down debt, reducing annual interest expenses by nearly $500 million.

Lumen signed $1 billion in infrastructure agreements during the third quarter, bringing the total to more than $10 billion since the hyperscaler buildout began in earnest last year. Reported revenue was still down 4%, but nearly $2 billion in fiber payments lifted free cash flow to $1.5 billion.

Lumen has transformed into a US enterprise-focused company through a series of divestitures, most recently the sale of the bulk of its consumer business to AT&T. The firm's remaining assets are well-positioned to benefit from the surge in demand for communications infrastructure and connectivity, driven by investments in artificial intelligence.

Lumen has transformed into a US enterprise-focused company through a series of divestitures, most recently the sale of the bulk of its consumer business to AT&T. The firm's remaining assets are well-positioned to benefit from the surge in demand for communications infrastructure and connectivity, driven by investments in artificial intelligence.

Revenue and adjusted EBITDA declines persisted at Lumen during the second quarter, down 5% and 17%, respectively. Management took steps to improve its balance sheet by refinancing $2 billion of debt, saving $50 million in annual interest expense.

Lumen has transformed itself into a US enterprise-focused company through acquisitions and, more recently, divestitures, positioning it to benefit in an age of growing connectivity and artificial intelligence utilization, but we think it will face intense competition along the way.

Lumen announced its divestiture of its consumer fiber business to AT&T for aftertax proceeds of $4.2 billion. The deal will allow Lumen to improve its balance sheet while focusing on its enterprise and hyperscale business. Lumen will retain its copper mass-market network.

Lumen has transformed itself into a US enterprise-focused company through acquisitions and, more recently, divestitures, positioning it to benefit in an age of growing connectivity and artificial intelligence utilization, but we think it will face intense competition along the way.

Lumen reported a 3% decline in revenue and flat adjusted EBITDA year over year in the first quarter, with the margin up over 300 basis points. Improved free cash flow generation of $354 million was supported by lower capital spending of $800 million and $500 million of additional deferred revenue.

Lumen has transformed itself into a US enterprise-focused company through acquisitions and, more recently, divestitures. The firm has indicated that it plans to continue moving in this direction with plans to sell the remainder of its consumer-focused mass markets business. Lumen is positioned to benefit in an age of growing connectivity and artificial intelligence, but we think it will face intense competition along the way.

We have taken a fresh look at Lumen.

Lumen has transformed itself into a US enterprise-focused company through acquisitions and, more recently, divestitures. The firm has indicated that it plans to continue moving in this direction with plans to sell the remainder of its consumer-focused mass markets business. Lumen is positioned to benefit in an age of growing connectivity and artificial intelligence, but we think it will face intense competition along the way.

Bloomberg reports that AT&T is in talks to acquire Lumen's mass-markets business, which owns fixed-line networks reaching about 22 million homes and businesses, primarily in the western US. Lumen sold a portion of this business in 2022 and has made no secret of its desire to sell the rest.

Lumen reported a 5% decline in sales and a 4% drop in adjusted EBITDA year over year, the slowest rate of decline in several quarters. The firm announced no new fiber deals. Management expects a relatively modest decline in adjusted EBITDA in 2025, with growth thereafter.

Within the last decade, Lumen has transformed its business to focus primarily on enterprises rather than consumers. The shift became even more pronounced in 2022, when Lumen sold its incumbent local exchange carrier, or ILEC, in 20 of the 36 states where it operated, ridding Lumen of nearly half its remaining consumer revenue.

Lumen has made little progress in slowing its rapid decline in sales and profits while its legacy business continues to shrink. On the plus side, management announced another $3 billion in private connectivity contracts it signed during the quarter, including recently announced partnerships with Meta, Alphabet, and Amazon, as it continues transforming to a focus on digital network services. Like the $5 billion in contracts headlined by Microsoft last quarter, these deals result in cash up front, but we don’t expect them to materially boost sales, as Lumen will recognize the revenue over as much as 20 years. We also don’t expect them to generate excessive cash profits. However, we maintain that these deals have resulted in a much more favorable cash position that has significantly reduced Lumen’s liquidity risk for the foreseeable future.