The service provider received regulatory approval to sell its ILEC business, which includes consumer, small business, wholesale and mostly copper-served enterprise customers and assets in 20 states, to Apollo-owned Brightspeed Internet in a deal that is pending of performance from last year.
Lumen Technologies has received long-awaited approval to sell its 20-state local exchange carrier (ILEC) business for $7.5 billion as a way for the beleaguered service provider to return to financial growth.
The Federal Communications Commission (FCC) on Monday approved the company’s previously announced sale to Brightspeed Internet, a company created by Apollo Global Management. The investment management firm has agreed to acquire Lumen Technologies’ ILEC business, which includes consumer, small business, wholesaler and primarily copper-served enterprise customers and assets in 20 states, with which to launch Brightspeed Internet in 2021.
The FCC’s approval closes the book on any final regulatory clearances needed to close the deal. Pending other customary closing conditions, the transaction with the Apollo-managed funds is expected to close early in Lumen’s fourth quarter, which begins in early November.
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Under the terms of the deal, Lumen will retain its ILEC assets in 16 countries, as well as its domestic fiber routes and international operations. Brightspeed Internet will receive a robust local area network as well as operations and back-office support to meet the growing demand for high-bandwidth connectivity, according to the two companies.
Monroe, La.-based Lumen on its February call with investors unveiled a plan to return to growth that will consist of two strategies. The first is the company’s investment in next-generation IT solutions. The second is through two strategic sales that the company announced in 2021.
Lumen Technologies announced earlier this month that it has officially completed the sale of its Latin American operations to Stonepeak for $2.7 billion in cash. The Latin American business, called Cirion, will now operate as an independent portfolio company of Stonepeak.
The major sales together are worth more than $10 billion and will help the company prioritize strategic fiber investments and grow its enterprise segment, Jeff Storey, Lumen’s president and CEO, said earlier this month.
For lumen’s second and most recent fiscal quarter, which ended June 30, the company reported net income of $344 million, compared with $506 million in the same quarter a year ago. Lumen reported total revenue of $4.61 billion and diluted earnings per share of 34 cents, down 6.3 percent from $4.92 billion and 46 cents per share in the second quarter of 2021.
Storey said in August that Lumen continues to operate through supply chain pressures and inflation-driven cost increases.