AT&T announced it has reached an agreement to acquire substantially all of Lumen’s Mass Markets fiber business for $5.75 billion, subject to purchase price adjustments, in an all-cash transaction that will expand investment in critical U.S. connectivity infrastructure, create new jobs, and accelerate high-speed fiber internet access to millions of Americans.
The Lumen Mass Markets fiber assets included in the deal total about 1 million fiber subscribers across more than 4 million fiber locations. And over time, these subscribers will transition to AT&T Fiber customers and enjoy the many benefits of being connected by a fast-growing fiber provider.
Customers with AT&T Fiber enjoy simple pricing and a premier home internet experience. And AT&T Fiber is backed by the AT&T Guarantee and offers multi-gig speeds3, built-in security, dependability, and optimal in-home coverage.
The deal will enable AT&T to significantly expand access to AT&T Fiber in major metro areas like Denver, Las Vegas, Minneapolis-St. Paul, Orlando, Phoenix, Portland, Salt Lake City and Seattle, as well as additional geographies. And AT&T expects this transaction to deliver significant value to consumers, shareholders and the company.
Some of the highlights include:
1.) Expanding the availability of AT&T Fiber – AT&T expects to significantly grow the number of AT&T Fiber customers within the acquired fiber footprint, using its extensive distribution, the strengths of AT&T Fiber, and the value of the AT&T Guarantee. Over time, AT&T expects to increase fiber customer penetration within the acquired footprint to levels more consistent with its current penetration of AT&T Fiber.
2.) Accelerating an efficient build engine for constructing fiber home internet connectivity outside of AT&T’s traditional wireline operating region – With this deal, AT&T will gain access to Lumen’s substantial fiber construction capabilities within its incumbent local exchange carrier (ILEC) footprint and plans to accelerate the pace at which fiber is being built in these territories. AT&T now expects to reach about 60 million total fiber locations by the end of 2030 – roughly doubling where AT&T Fiber is available today.
3.) Giving American consumers more choice when selecting broadband and wireless services the way they prefer (with fiber and 5G together) – Customers with both AT&T Fiber and the company’s wireless services are more likely to recommend AT&T, remain customers longer and provide the best returns. AT&T expects that its ability to offer 5G wireless and fiber broadband connectivity within Lumen’s Mass Markets fiber footprint will enable the Company to grow its base of high-value converged customer relationships and drive gains in its Mobility business.
The acquired portion of the Lumen Mass Markets business includes last-mile Mass Markets fiber assets and the associated network elements in central offices enabling fiber services, and substantially all of Lumen’s Mass Markets fiber customers. This will position AT&T to deliver a consistent experience to AT&T Fiber customers within Lumen’s Mass Markets footprint over time.
Lumen’s enterprise fiber customers and Mass Markets copper-based customers as well as the associated assets to support them are not part of this agreement.
After the closing of the deal, Lumen will provide AT&T with services and support under multiple transitional agreements. These agreements are expected to last approximately two years after deal close and will cover certain field operations, network deployment, IT systems, billing, customer support, and other services. As part of the transaction, AT&T will also receive long-term access to certain Lumen central offices, poles, and conduits.
The company expects that this transaction will drive returns that are comparable to AT&T’s current fiber investments, as outlined at its 2024 Analyst & Investor Day. In the 12-24 months following close, the impact of the transaction is expected to be immaterial to consolidated adjusted EBITDA, adjusted EPS and free cash flow, and accretive over the long-term.
KEY QUOTES:
“We’re leading the race to connect more Americans with fiber, the best broadband connectivity technology available. This deal with Lumen represents a significant investment in U.S. connectivity infrastructure that will create jobs and spur economic activity in numerous regions and major metro areas across 11 states. As we advance our fiber build, we’ll serve more communities with world-class connectivity and expect to roughly double where AT&T Fiber is available by the end of 2030.”
John Stankey, Chairman and CEO, AT&T
