While he would not offer specifics, Lumen will consider various options like selling more assets or partnering in a wholesale deal. The service provider plans to continue with the pace of its last-mile fiber build for consumers.
“It’s probably a market-by-market approach,” Stansbury said. “The menu is to sell it, partner, wholesale some pieces, and we’re looking at all that right now.”
While Lumen sees its future potential as a critical business service provider, it is aware that the ILEC consumer segment, which is its initial heritage, is rapidly consolidating.
Although the predecessor company CenturyLink was a key consolidator of the ILEC and competitive providers, Lumen previously divested a large part of its ILEC business, which now operates as Brightspeed in multiple states across the U.S.
Speaking to investors during the BofA Securities 2023 Leveraged Finance Conference, Chris Stansbury, CFO of Lumen, said it could see more consolidation of its ILEC properties.
“The ILEC and the enterprise are attractive businesses,” he said. “We believe our special sauce is on the enterprise side given the innovation, disruption, and ROI we can bring.”
He added that consumer business is focused on building networks that can serve consumers for several decades.
“This space is ripe for consolidation and needs to be consolidated,” Stansbury said. “We won’t be the consolidator. So, we'll look for options at the right time.”
Keeping fiber builds pace
As Lumen looks at options for the telco and consumer side of its business, the provider continues with its fiber-to-the-home (FTTH) build plans.
It will focus on meeting the build-out goals it previously set. During its third-quarter earnings call, the service provider told investors it is on track to add 500,000 new fiber broadband locations to reach 3.5 million this year.
As of September 30, total fiber-enabled locations were 141,000, bringing the real fiber-enabled locations to approximately 3.5 million.
Stansbury said that it remains challenged by the cost of lighting up new markets with fiber.
“Given the cost of capital, people are not ramping up their fiber builds right now,” he said. “Our plan going forward is to stay at the pace we are at now.”
Focus on existing markets
A key focus for Lumen’s FTTH build will be to expand service in the existing markets it already serves.
The provider said it would reach 500,000 homes and small businesses this year in June.
Looking forward, Stansbury said that it is on track to meet its goals. “We’re pulling back on the original plan we laid out in June to expand it further,” he said. “We’re holding at current rates, and we think that’s the best approach for that business.”
Lumen plans to reveal the penetration by year of build and time sometime next year.
“What you will see is even in the builds where we did not do the smartest things, those markets are performing at par with competition,” Stansbury said. “We’re not missing out on competition on penetration, but given the cost of capital, we could do better.”
But the fiber service push isn’t just about connecting more premises. The service provider consolidated the former CenturyLink and other brands under the Quantum Fiber umbrella.
“Up till a few months ago, we were still selling two brands in the marketplace,” Stansbury said. “Some IT work has allowed us only to sell Quantum Fiber, which allows us to ramp up the market engine, and that’s where we’re focused right now.”
Sean Buckley
Sean is responsible for establishing and executing the editorial strategies of Lightwave and Broadband Technology Report across their websites, email newsletters, events, and other information products.