As Lumen moves forward with its innovating for growth strategy in its business services segment, the service provider is enhancing the reach of new services like network as a service (NaaS).
Providing NaaS service is part of a 3-pronged strategy to transform the business unit: secure the base, drive commercial excellence, and innovate for growth.
Thus far, the service provider has seen growing adoption of its NaaS services across various vertical segments. “We've made great progress driving adoption of our first NaaS offering called Lumen Internet On-Demand,” said Kathleen Johnson, CEO of Lumen, during the third-quarter earnings call. “This new digital capability is now generally available and has lighthouse customers in 13 industries, including health care, technology, insurance, retail, manufacturing and public sector, to name a few.”
Besides its organic sales efforts, Lumen is working with Equinix and Digital Realty to extend the service to more customers.
“In addition to selling NaaS directly to customers, Lumen is also leveraging our partner ecosystem to drive scale,” Johnson said. “Customers can buy Lumen Internet On-Demand through 136 enabled data centers in 10 different markets across North America through our great partners, Digital Realty and Equinix.”
The on-demand bandwidth service is only one part of Lumen’s strategy to “cloudify telecom.” Lumen plans to add API capability to allow customers to activate NaaS in their business applications. It also plans to offer security with DDoS and dynamic bandwidth capability for ultimate usage flexibility.
“Now, together with our Edge Fabric and ExaSwitch, Lumen NaaS is setting the table for a new market category for the modern communication infrastructure platform,” Johnson said. This platform is focused on optimizing application performance across hybrid architectures of on-prem, at the edge, and multi-cloud and one that makes room for rapidly changing network needs as Gen AI becomes mainstream.”
Fluctuating results
While Lumen’s strategy is compelling, the service provider saw varied third-quarter results in the business segment. The company has added 2,500 new logo customers this year across large enterprise, mid-market, and public sector segments.
Business revenue declined 0.1% sequentially to $2.89 billion. Mid-market revenue declined 1.8% sequentially.
Within Lumen’s Enterprise channels, its business segment excluding wholesale, revenue grew 1.1% sequentially. Meanwhile, Lumen’s enterprise revenue grew 0.3% in the third quarter.
“Our Large Enterprise revenue grew 0.3% sequentially in the third quarter,” said Chris Stansbury, CFO of Lumen. “Large Enterprise revenue trends improved compared to the second quarter year-over-year when excluding the impact of divested businesses driven primarily by continued strong trends in the Grow products segment due to demand for IP, dark fiber and colocation and moderating declines in Nurture and Harvest.”
Public sector growth
One area of the business segment where Lumen did see more significant growth was in the public sector, where revenue rose 7.2% sequentially.
Throughout the year, Lumen had secured contracts with several large public sector agencies, including the U.S. Defense Information Systems Agency (DISA), the Department of Agriculture, and the Department of the Interior.
This week, the service provider also won a $110 million contract from the U.S. Defense Information Systems Agency (DISA) to provide secure, mission-critical network services to the U.S. Department of Defense.
“Excluding the impact of our divested businesses, public sector trends improved year-over-year primarily due to higher other revenue, which includes nonrecurring equipment and IT solutions, improvement in Grow revenue and moderating declines in Nurture and Harvest products during the third quarter,” Stansbury said.
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