Lumen to sell local incumbent carrier operations in 20 states to Apollo Funds for $7.5 billion
Via Lumen press room
Aug 4, 2021
DENVER -- Lumen Technologies (NYSE: LUMN) today announced it has entered into a definitive agreement to sell its ILEC (incumbent local exchange carrier) business, including its consumer, small business, wholesale and mostly copper-served enterprise customers and assets, in 20 states to funds managed by affiliates of Apollo Global Management, Inc. (NYSE: APO) (the "Apollo Funds") for $7.5 billion, including debt assumption of approximately $1.4 billion, and subject to working capital and various other purchase price adjustments.
Under the terms of the transaction, Lumen will retain its ILEC assets in 16 states, as well as its national fiber routes and CLEC (competitive local exchange carrier) networks1 as it delivers the fastest, most-secure platform for next-gen business applications and data. For Apollo Funds, the transaction will provide a robust, scaled local network, as well as the operations and back-office support to meet the accelerating demand for high-bandwidth connectivity and fiber technology. Assets in the 20 states being acquired include:
- Local fiber and copper network
- Broadband and voice for consumer, enterprise and wholesale customers
- Fiber and copper connectivity to enabled buildings
- Connectivity to tower sites
- Central offices
"This transaction is an important step in our continued efforts to transform Lumen and drive future growth for our company," said Jeff Storey, Lumen president and CEO. "We are pleased with the attractive valuation we received for these assets, which highlights the overall value of Lumen's extensive asset portfolio. Apollo Funds will receive a great business with a strong customer base, dedicated employees, and a platform for future growth."
"The team at Lumen has built a great business and we see an incredible opportunity to provide leading edge, fiber-to-the-home broadband technology to millions of its business and residential customers," said Aaron Sobel, Private Equity Partner at Apollo. "Our investment will help accelerate the upgrade to fiber optic technologies, and we are excited to have such a high-caliber management team ready to bring faster and more reliable internet service to many rural markets traditionally underserved by broadband providers."
The transaction is expected to be roughly leverage neutral, with an expected close in the second half of 2022, subject to customary closing conditions including required regulatory approvals.
Management will discuss this transaction in more detail on the company's conference call scheduled for this afternoon, August 3rd, at 5:00pm ET.
Citi, Goldman Sachs, Bank of America, and Morgan Stanley served as financial advisors to Lumen in the transaction and Jones Walker served as legal counsel. Advisors to the Apollo Funds include Mizuho, LionTree, Barclays and Credit Suisse as financial advisors; Altman Solon as telecommunications, media and technology consultant; and Paul, Weiss, Rifkind, Wharton & Garrison LLP as lead legal counsel, together with Jenner & Block LLP and Morgan Lewis & Bockius LLP as regulatory counsel.
1 NTD: Lumen will retain CLEC operations in all 36 states.
- Access our resource page for more information.
- Our 8-K report that we plan to file following this release.
Second Quarter 2021 Earnings Results
Separately, today the Company reported results for the second quarter ended June 30, 2021. The conference call will be streamed live over Lumen's website at ir.lumen.com this afternoon, August 3rd, at 5:00pm ET. If you are unable to join the call via the web, the call can be accessed live at +1 877-283-5145 (U.S. Domestic) or +1 312-281-1201 (International).
Lumen is guided by our belief that humanity is at its best when technology advances the way we live and work. With approximately 450,000 route fiber miles and serving customers in more than 60 countries, we deliver the fastest, most secure platform for applications and data to help businesses, government and communities deliver amazing experiences.
Learn more about the Lumen network, edge cloud, security, communication and collaboration solutions and our purpose to further human progress through technology at news.lumen.com/home, LinkedIn: /lumentechnologies, Twitter: @lumentechco, Facebook: /lumentechnologies, Instagram: @lumentechnologies and YouTube: /lumentechnologies. Lumen and Lumen Technologies are registered trademarks in the United States.
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