AT&T Negotiates Purchase of Lumen’s Consumer Fiber Business

Lumen Technologies Inc. LUMN saw its shares decline on Tuesday amid news that AT&T is in discussions to acquire the company’s consumer fiber division.

Key Details on the Acquisition Talks

The ongoing negotiations could result in a deal worth over $5.5 billion, although the terms are not yet finalized, and discussions may ultimately fall through. Neither Lumen nor AT&T has publicly commented on the talks at this point.

Market Reactions Following Rumors

Lumen’s stock initially dropped by as much as 13%, hitting a low of $4.26 during the day, which valued the company at around $4.4 billion. Conversely, AT&T Inc. T experienced a rise of 1.1%, closing at $27.27, which places its market capitalization near $196 billion.

CFO Remarks on Fiber Business Strategy

During a recent industry conference, Lumen’s Chief Financial Officer, Chris Stansbury, acknowledged the potential for selling its fiber-to-the-home segment. He indicated that Lumen does not seek to consolidate its position in the increasingly competitive fiber market. Stansbury cited major industry moves, such as Verizon’s acquisition of Frontier Communications and BCE’s purchase of Ziply Fiber, as indicators of market trends.

Future Outlook and Investor Sentiment

Stansbury mentioned that bundling fiber with wireless services can bolster large providers by lowering customer churn and enhancing pricing capabilities. He also confirmed that Lumen’s fiber unit has drawn considerable interest from potential buyers. If the acquisition proceeds, it could aid Lumen in alleviating its debt burden. However, investors appear concerned about the uncertainty surrounding the sale and how it may affect the company’s future in the fiber market.

Stock Performance Summary

LUMN Price Action: As of Tuesday’s close, shares of Lumen Technologies fell by 9.47%, landing at $4.40, according to Benzinga Pro.

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Photo: Courtesy Lumen Inc.