Lumen Applied sciences has accomplished the $5.75 billion sale of its Mass Markets fiber-to-the-home (FTTH) enterprise, which incorporates Quantum Fiber, to AT&T. The money deal – topic to working capital and buy value changes – covers operations in 11 U.S. states and marks a pivotal second in Lumen’s ongoing transformation right into a next-generation enterprise digital networking supplier.
The settlement transfers greater than 4 million fiber enablements and almost a million Quantum Fiber prospects to AT&T as of March 31, 2025. Based on Lumen’s Q1 2025 metrics, these accounts contribute over $750 million in annual income. With the sale finalized, Lumen intends to considerably refocus on its enterprise enterprise whereas preserving the foundational infrastructure property crucial to that technique.
“This can be a once-in-a-generation alternative, we’re constructing a digital networking enterprise that helps right this moment’s AI calls for and can be prepared for quantum computing tomorrow,” stated Kate Johnson.Kate Johnson, Lumen’s president and CEO, described the transaction as a strategic transfer that aligns with the corporate’s long-term imaginative and prescient. “We’re focusing extra on enterprise purchasers, and this deal will increase our monetary flexibility, permitting us to reimagine networking for enterprises in a multi-cloud, AI-first world. We’re maintaining the core infrastructure as a part of this settlement, which permits us to maintain innovating and delivering the bandwidth, efficiency, and safety our enterprise purchasers demand.”
Though AT&T now owns the majority of Lumen’s FTTH operations, together with roughly 95% of Quantum Fiber property, Lumen retains important elements that can help its enterprise-centric evolution. These embody central workplaces, key actual property holdings, and the entire nationwide, regional, and metro fiber spine infrastructure. Lumen may even keep and repair its legacy copper community, which continues to serve a section of its client base.
The monetary advantages of the transaction are appreciable. Lumen plans to make use of roughly $4.2 billion in web proceeds, mixed with present money reserves, to retire roughly $4.8 billion in superpriority debt. The discount in debt is anticipated to decrease annual curiosity bills by about $300 million. Moreover, the corporate’s web debt to adjusted EBITDA (aEBITDA) ratio is projected to say no from 4.9x to three.9x primarily based on 2025 forecasts.
Past quick stability sheet enhancements, the sale is anticipated to reinforce free money stream by decreasing fiber-related capital expenditures by round $1 billion yearly. This shift permits Lumen to redirect assets towards its enterprise providers division, positioning the corporate for accelerated funding and innovation.
AI-Targeted Networking Contracts
Lumen Applied sciences has already made headway in its enterprise pivot, having signed $8.5 billion in AI-focused networking contracts with hyperscale purchasers. The corporate is concentrating on a complete of 47 million intercity fiber miles by 2028, underscoring its ambition to grow to be a central participant in next-generation networking. As a part of this effort, Lumen will proceed creating its Lumen Digital platform to supply streamlined, safe, and user-friendly enterprise networking providers.
Lumen can be investing in rising infrastructure options comparable to Direct Fiber Entry (DFA), Cloud On-ramps, and Multicloud Gateways. These applied sciences are designed to reinforce the combination of bodily and digital community layers, delivering higher efficiency, capability, intelligence, and safety to enterprise prospects.
“This can be a once-in-a-generation alternative,” stated Kate Johnson. “We’re constructing a digital networking enterprise that helps right this moment’s AI calls for and can be prepared for quantum computing tomorrow. The infrastructure we’re retaining is important to this future, and this deal represents a foundational step in our technique.”
The transaction is anticipated to totally shut within the first half of 2026, topic to customary closing circumstances and regulatory approvals. Lumen was suggested on the transaction by JP Morgan Securities LLC and Goldman Sachs & Co. LLC, with authorized counsel offered by Latham & Watkins LLP. Strategic advisory providers have been furnished by Teneo and FTI Consulting.
