AT&T is reportedly in discussions to potentially acquire Lumen Technologies’ consumer fiber segment. This deal could significantly expand AT&T’s customer base, adding millions of new fiber-to-the-home connections.
According to Bloomberg reports, AT&T is engaged in exclusive talks to purchase Lumen’s consumer fiber unit valued at approximately $5.5 billion. The acquisition would transfer over a network that reached more than 4 million homes by the end of Q4 2024, with nearly 1.1 million active subscribers. These numbers represent substantial annual growth, making this acquisition a strategic fit for AT&T as it expands its fiber services.
However, on the financial front, Lumen’s consumer division experienced declines in revenue and adjusted EBITDA last year. Revenue dropped to $2.74 billion from $2.94 billion in the previous year, while adjusted EBITDA saw a milder decrease to $1.45 billion from $1.51 billion.
The acquisition would align well with AT&T’s aggressive fiber expansion plans. By Q4 2024, AT&T had already covered 28.9 million premises, moving towards its 30 million target for the year. Looking ahead, the company plans to cover 50 million premises by 2029. This will be achieved through its own deployments, partnerships like the Gigapower venture with Blackrock, and agreements with neutral host providers.
Acquiring Lumen’s unit at an estimated $5.5 billion translates to $1,375 per premises passed or $5,000 per active subscriber. This is competitive compared to Verizon‘s acquisition of Frontier’s fiber operations, which cost nearly $2,800 per premises and over $9,000 per subscriber. These figures suggest that Lumen offers economical value.
For Lumen, the sale aligns with a shift in focus towards its enterprise market, a segment already contributing nearly 80% of its revenues and EBITDA. Recent achievements include securing substantial contracts driven by AI demands, amounting to $8.5 billion by the end of 2024.