Lumen and Brightspeed Handshake

Lumen’s sale of incumbent local exchange carrier (ILEC) operations in 20 states in the Midwest and Southeast to Brightspeed has closed. When the deal was announced in August 2021, the selling price was $7.5 billion, with the acquiring company also slated to take on $1.4 billion in Lumen debt.

According to a Lumen press release, the move will enable Lumen to “sharpen its enterprise focus” and support fiber deployment plans in the 16 states where the company is retaining its ILEC operations.

When Lumen announced plans to sell the 20-state ILEC operations, it said that the states it was retaining were the ones in which the company already had deployed a considerable amount of fiber and where it was most likely to deploy more fiber.

Lumen, formerly known as CenturyLink and which uses the CenturyLink name for its ILEC operations, has been heavily focused on the enterprise market since it acquired Level 3 in 2017. Lumen has also launched the Quantum Fiber brand for its expanding fiber footprint.

Lumen Brightspeed Synergies

Brightspeed, which is owned by investment firm Apollo Funds, sees opportunity in the divested states, which are primarily in the eastern and midwest U.S.

Just three months after the Lumen divestiture was announced, the Brightspeed name and management team were announced. Since then, the company has been announcing state-by-state fiber deployment plans for 2023 and beyond.

The company has said that it plans to invest $2 billion over the next five years to make fiber available to as many as 3 million homes and businesses.

Lumen divestiture map
Lumen Divestiture Map (Source: Lumen)

“Brightspeed has acquired a business with a strong customer base, dedicated employees and a platform for future growth,” said Lumen President and CEO Jeff Storey in today’s press release.

The largely copper-based assets that Brightspeed has acquired are likely more valuable now than they were at the time the deal was announced. Brightspeed will have 70K fiber subscribers and 1.2 million total broadband subscribers.

Over the last year, the government has made an unprecedented amount of funding available to cover some of the costs of making high-speed broadband available in unserved and underserved rural areas, and Brightspeed would appear to be in a good position to obtain some of that funding.

Just last month the company was awarded over $90 million for deployments in 29 North Carolina counties.

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