Lumen Technologies has agreed to sell its local telecom business in 20 states to Apollo Global Management for USD 7.5 billion, including around USD 1.4 billion in debt. The sale leaves Lumen with CenturyLink operations in 16 states in the west of the US still, where it has a denser network and fibre footprint.
Under the terms of the deal, Lumen will its local fibre and copper network, broadband and voice services for consumer, enterprise and wholesale customers under the CenturyLink brand, fibre and copper connectivity to enabled buildings, connectivity to tower sites and central offices in the 20 states in the Midwest, South and mid-Atlantic regions of the country. Lumen will retain the ILEC assets in 16 states, as well as its national fibre routes and CLEC networks in these areas.
The operator has been looking to sell some of the residential business for at least two years, so it can focus on its more profitable activities in enterprise and data services. Apollo, which recently agreed to buy Verizon Media as well, plans to continue the upgrade to FTTH in the acquired areas.
Lumen expects the deal to have a largely neutral impact on its debt position. The sale should be completed in the second half of 2022, subject to regulatory approvals.
The retained operations have 21 million addressable locations in the west of the country, including 2.4 million fibre premises enabled. Around 70 percent of the footprint is in urban and suburban areas. The network sold to Apollo counts 7 million addressable locations and 0.2 million fibre-enabled units.
Higher cash flow, lower capex
The sale was announced alongside Lumen's second-quarter results, which show a continued decline in revenues across all market segments. Total revenue fell 5 percent year-on-year to USD 4.92 billion, and adjusted EBITDA was little changed at USD 2.09 billion.
The company upgraded its forecast for full-year free cash flow to USD 3.1-3.3 billion from an earlier estimate of USD 2.8-3.0 billion. This is supported by a sharp reduction in capex in Q2, with the full-year capex budget lowered to USD 3.2-3.5 billion from the previous outlook of USD 3.5-3.8 billion. The company also authorised a two-year share buyback programme worth up to USD 1 billion.
