Lumen Technologies Looks To Offload $5B Consumer Business: Report
The struggling service provider is reportedly in talks with Apollo Global Management in a move that would be Lumen’s second attempt at offloading its consumer business.
Lumen Technologies, formerly known as CenturyLink, is reportedly in negotiations to sell off its consumer operations to investment management firm Apollo Global Management.
The deal, which would include the telecom‘s consumer business in certain U.S. states, is valued at more than $5 billion, according to a report published Tuesday by Bloomberg that cited people with knowledge of the matter.
Lumen Technologies told CRN that while it doesn’t comment on specific rumors or speculation, the company is “excited” about the future of its consumer business and is investing in enhanced product capabilities, expanding its fiber footprint and improving digital interaction with its consumer customers.
“As a normal part of our business, we also evaluate all aspects of our business to ensure we are using our assets to deliver the best value for our customers, and shareholders. If we see opportunities to increase value with alternate approaches, we look into our options,” a spokesperson told CRN in an email.
It’s no secret that Lumen Technologies has been mulling a sale to boost revenues, which had been struggling prior to the COVID-19 pandemic. The company’s CEO, Jeff Storey, told investors in May that Lumen was “not satisfied“ with its Q1 2021 earnings.
Storey said at the time that Lumen was willing to consider divestitures of non-core assets as a means of returning to growth in the future. “We recognize with change coming for our customers, those are core assets driving growth and if it’s not core, we’re open and opportunities to talking about changes,” he said.
It’s not the first time the service provider mentioned it was looking to shop around some assets. CenturyLink in 2019 had said it was “evaluating strategic alternatives” for its consumer business as the company generates about three-quarters of its revenue from business customers.
Lumen, however, only generated 71 percent of its revenue from business services during its most recent quarter, which ended March 31. The segment has been stressed in recent quarters because of declining small- and midsize-business revenue and the impact of the COVID-19 pandemic on business buying trends, according to Lumen.
The service provider in September 2020 rebranded itself to Lumen Technologies in an attempt to highlight it’s focus on next-generation network services to help business customers transform, including smart cities, virtual collaboration, and high-performance networking and security, the Monroe, La.-based company said at the time.
The acquisition could be announced in the coming weeks if a deal is reached, but terms have not yet been finalized, according to the report.