US telco giant AT&T has reached an agreement to acquire substantially all of Lumen’s Mass Markets fibre business for $5.75 billion (€5bn), subject to purchase price adjustments, in an all-cash transaction that it says will expand investment in critical US connectivity infrastructure, create new middle-class jobs, and accelerate high-speed fibre Internet access to millions of Americans.“We’re leading the race to connect more Americans with fibre, the best broadband connectivity technology available,” said John Stankey, Chairman and CEO, AT&T. “This deal with Lumen represents a significant investment in US connectivity infrastructure that will create jobs and spur economic activity in numerous regions and major metro areas across 11 states. As we advance our fibre build, we’ll serve more communities with world-class connectivity and expect to roughly double where AT&T Fiber is available by the end of 2030.”The Lumen Mass Markets fibre assets included in the deal total about 1 million fibre subscribers across more than 4 million fibre locations. Over time, these subscribers will transition to be AT&T Fiber customers and enjoy what AT&T says are the many benefits of being connected by America’s fastest-growing fibre provider.The transaction will enable AT&T to significantly expand access to AT&T Fiber in major metro areas such as Denver, Las Vegas, Minneapolis-St. Paul, Orlando, Phoenix, Portland, Salt Lake City and Seattle, as well as additional geographies. AT&T expects this transaction to deliver significant value to consumers, shareholders and the Company. Highlights include:
- Expanding the availability of AT&T Fiber. AT&T expects to significantly grow the number of AT&T Fiber customers within the acquired fibre footprint, using its extensive distribution, the strengths of AT&T Fiber, and the value of the AT&T Guarantee. Over time, AT&T expects to increase fibre customer penetration within the acquired footprint to levels more consistent with its current penetration of AT&T Fiber.
- Accelerating an efficient build engine for constructing fibre home internet connectivity outside of AT&T’s traditional wireline operating region. Through this transaction, AT&T will gain access to Lumen’s substantial fibre construction capabilities within its incumbent local exchange carrier (ILEC) footprint and plans to accelerate the pace at which fibre is being built in these territories. AT&T now expects to reach approximately 60 million total fibre locations by the end of 2030 – roughly doubling where AT&T Fiber is available today
- Giving American consumers more choice when selecting broadband and wireless services the way they prefer – with fibre and 5G together. Customers with both AT&T Fiber and the Company’s wireless services are more likely to recommend AT&T, remain customers longer and provide the best returns. AT&T expects that its ability to offer 5G wireless and fibre broadband connectivity within Lumen’s Mass Markets fibre footprint will enable the Company to grow its base of high-value converged customer relationships and drive gains in its Mobility business.
The acquired portion of the Lumen Mass Markets business includes last-mile Mass Markets fibre assets and the associated network elements in central offices that enable fibre services, as well as substantially all of Lumen’s Mass Markets fibre customers. This will position AT&T to deliver a consistent experience to AT&T Fiber customers within Lumen’s Mass Markets footprint over time.AT&T will hold the acquired fibre network assets, including certain fibre network deployment capabilities, in a new, fully owned subsidiary (‘NetworkCo’). It is expected that along with the fibre assets, certain employees will move, or receive offers to move, from Lumen to AT&T or NetworkCo as a part of this deal.Lumen’s enterprise fibre customers and Mass Markets copper-based customers as well as the associated assets to support them are not part of this agreement.After closing, Lumen will provide AT&T with services and support under multiple transitional agreements. These agreements are expected to last approximately two years after deal close and will cover certain field operations, network deployment, IT systems, billing, customer support, and other services. As part of the transaction, AT&T will also receive long-term access to certain Lumen central offices, poles, and conduits.The transaction is expected to close in the first half of 2026 and is subject to regulatory approval by the Department of Justice as well as other customary closing conditions.After closing the transaction with Lumen, the Company plans to sell partial ownership of NetworkCo to an equity partner that will co-invest in the ongoing business. AT&T expects to identify an equity partner and close a transaction within approximately six to 12 months of closing the transaction with Lumen.Upon closing a transaction with an equity partner, the Company expects NetworkCo will be deconsolidated from AT&T’s financial statements and operate as a wholesale commercial open access platform, providing fibre access services to AT&T as the anchor tenant. All acquired Lumen Mass Markets fibre customers will remain AT&T customers.AT&T believes this planned structure is consistent with its balanced approach to capital allocation – supporting the accelerated and capital-efficient expansion of AT&T Fiber outside of its traditional wireline operating region.Based on AT&T’s position as the operator of the largest and fastest-growing fibre broadband network in the US and track record of generating attractive returns on its fibre investments, the Company is highly confident it can secure an equity partner for NetworkCo.This transaction aligns with the priorities outlined at AT&T’s 2024 Analyst & Investor Day, including its goal of becoming the best connectivity provider in America while providing more value to customers, shareholders and the Company. These priorities have not changed, and AT&T continues to operate the business to achieve the financial plan and capital returns outlined in December 2024.The Company expects that this transaction will drive returns that are comparable to AT&T’s current fibre investments, as outlined at its 2024 Analyst & Investor Day. In the 12-24 months following close, the impact of the transaction is expected to be immaterial to consolidated adjusted EBITDA, adjusted EPS and free cash flow, and accretive over the long-term.AT&T expects to continue operating within its net leverage target of net debt-to-adjusted EBITDA in the 2.5x range following the transaction with Lumen and anticipated transaction with an equity partner for NetworkCo.The Company remains committed to repurchasing shares under the previously announced $10 billion authorisation, with plans to repurchase at least $3 billion of common stock by year-end and the remainder during 2026. AT&T reiterates all full-year 2025 financial and operational guidance.“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 per cent 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 annualised 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.”
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