The service provider has received regulatory approval to sell its ILEC business, which includes its consumer, small business, wholesale and mostly copper-served enterprise customers and assets in 20 states to Apollo-owned Brightspeed Internet in a deal that’s been pending since last year.
Lumen Technologies has received its long-awaited approval to sell off its incumbent local exchange carrier (ILEC) business in 20 states for $7.5 billion as a way for the struggling service provider to return to financial growth.
The Federal Communications Commission (FCC) on Monday approved the company’s previously announced sale to Brightspeed Internet, a company that was created by Apollo Global Management. The investment management firm agreed to acquire Lumen Technologies’ ILEC business, which includes its consumer, small business, wholesale and mostly copper-served enterprise customers and assets in 20 states with which to launch Brightspeed Internet in 2021.
The FCC’s approval closes the book on all final regulatory clearances needed to close the deal. Pending other customary closing conditions, the transaction with Apollo-managed funds is expected to close early in Lumen’s fourth quarter, which starts in the beginning of November.
[Related: Lumen Technologies To Grow Slumping Enterprise, Midmarket Segments By Retooling Business Units]
Via the terms of the deal, Lumen will hold onto its ILEC assets in 16 states, as well as its national fiber routes and international operations. Brightspeed Internet will gain a robust local network, as well as the operations and back-office support to meet the growing demand for high-bandwidth connectivity, according to the two companies. ADVERTISEMENT
Monroe, La.-based Lumen during its earnings call with investors in February revealed a plan to return to growth that would consist of two strategies. The first is the company’s investment in the next-generation IT solutions. The second is through two strategic divestitures that the company announced in 2021.
Lumen Technologies earlier this month announced it had officially closed the sale of its Latin American operations to Stonepeak for $2.7 billion in cash. The Latin American business, called Cirion, will now operate as an independent portfolio company of Stonepeak.
The major divestitures together are worth more than $10 billion and will help the company prioritize strategic fiber investments and grow its enterprise segment, said Jeff Storey, Lumen’s president and CEO earlier this month.
For lumen‘s second and most recent fiscal quarter that ended on June 30, the company reported net income of $344 million compared to $506 million in the same quarter a year ago. Lumen reported total revenue of $4.61 billion and diluted earnings per share of 34 cents, a 6.3 percent decline compared with $4.92 billion and 46 cents per share in Q2 2021.
Storey in August said that Lumen continues to work through supply chain pressures and inflation-driven cost increases.