Lumen Technologies (NYSE: LUMN) and Brightspeed have announced the close of the deal between Lumen and Apollo-managed funds (NYSE: APO) that will create Brightspeed. The transaction sees former CenturyLink incumbent local exchange carrier (ILEC) businesses in 20 states transferred to Apollo/Brightspeed in exchange for $7.5 billion, including assumption of approximately $1.4 billion in debt (see "Lumen to sell CenturyLink ILECs in 20 states to Apollo Funds"). Lumen retains ILEC assets in 16 states.
Brightspeed becomes the fifth-largest ILEC in the U.S., employing nearly 3,400 people. Its service footprint covers more than 6.5 million locations in mainly rural and suburban communities across the Midwest, Southeast, and parts of Pennsylvania and New Jersey.
The infrastructures through which these ILECs deliver services to residential and business customers are a combination of fiber and copper. However, Brightspeed has spent much of this year touting plans to build extensive fiber to the premises (FTTP) networks. The new company plans to begin its XGS-PON based FTTP deployments in 13 of the 20 states in its footprint by the end of this year, with a goal of passing more than 1 million premises across 17 states through the end of 2023. Brightspeed hopes to bring FTTP to more than 3 million premises over the next five years and has earmarked at least $2 billion to fund the initiative (see "Brightspeed sets FTTH target for 2023").
"After more than a year of preparation, we are thrilled to officially begin serving customers as Brightspeed and to start work to accelerate reliable connectivity for existing and new customers across our footprint," said Bob Mudge, Brightspeed’s CEO. "We believe internet equals opportunity for households and businesses alike and are committed to making an impact on the rural-urban digital divide. We are fortunate to have an exceptional strategic partner in Apollo, whose significant investment speaks volumes about the potential of our service area and what fiber technology can do to further the growth and competitiveness of our communities."
Improved focus
Lumen, meanwhile, sees the sale as a way to improve its focus on the enterprise customers that are at the heart of its strategic plan (see “CenturyLink renames itself Lumen Technologies”) as well as support its accelerated Quantum Fiber deployment efforts and drive growth on the Lumen Platform. To this end, the company previously sold its Latin American operations to Stonepeak ("Lumen closes Latin American business sale to Stonepeak to create Cirion").
“This is an important step in realizing long-term shareholder value while focusing our portfolio on the strongest growth opportunities, including investments in markets where we can concentrate our resources to reach more customers with maximum efficiency,” said Jeff Storey, Lumen president and CEO, who will step down from those roles this November. “Brightspeed has acquired a business with a strong customer base, dedicated employees, and a platform for future growth. I’m very proud of our team for their dedicated work in closing this transformational project.”
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