The deal will enable the telecommunications firm to sharpen its enterprise focus, drive growth on the Lumen Platform and fast track the deployment of Quantum Fiber
Lumen Technologies has agreed to divest its incumbent local exchange carrier (ILEC) business in 20 US states to funds managed by affiliates of Apollo Global Management (Apollo Funds) for $7.5bn in an all-cash deal.
The consideration includes a debt assumption of nearly $1.4bn.
The business being sold includes the small business, consumer, wholesale and mostly copper-served enterprise customers and assets of the American telecommunications company.
Presently operating under the CenturyLink brand, the ILEC business serves over six million consumers and small businesses across 20 Midwest and Southeast states.
The assets involved in the deal include broadband and voice for consumer, wholesale, and enterprise customers, local fibre and copper network, fibre and copper connectivity to enabled buildings, central offices, and connectivity to tower sites.
The sale will allow Lumen Technologies to sharpen its enterprise focus and bring in growth on the Lumen Platform, which is said to be a fast and secure platform for next-gen apps and data.
Besides, the transaction will also help it fast track the deployment of Quantum Fiber, the company’s fibre-optic network.
Lumen Technologies president and CEO Jeff Storey said: “This transaction is an important step in our continued efforts to transform Lumen and drive future growth for our company.
“We are pleased with the attractive valuation we received for these assets, which highlights the overall value of Lumen’s extensive asset portfolio. Apollo Funds will receive a great business with a strong customer base, dedicated employees, and a platform for future growth.”
As per the terms of the deal, the telecommunications company will retain its ILEC assets in 16 states in addition to its national fibre routes and competitive local exchange carrier (CLEC) networks.
The deal follows Lumen’s announcement in July 2021 to sell its Latin American business to Stonepeak for $2.7bn.
For Apollo Funds, the deal is expected to gain a strong, scaled local network along with operations and back-office support to cope up with the quickly growing demand for high-bandwidth connectivity and fibre technology.
Apollo Funds private equity partner Aaron Sobel said: “The team at Lumen has built a great business and we see an incredible opportunity to provide leading-edge, fibre-to-the-home broadband technology to millions of its business and residential customers.
“Our investment will help accelerate the upgrade to fibre optic technologies, and we are excited to have such a high-calibre management team ready to bring faster and more reliable internet service to many rural markets traditionally underserved by broadband providers.”
The deal, which is subject to regulatory approvals and customary closing conditions, is anticipated to close in 2022.
Earlier this year, Apollo Funds signed a deal worth $5bn to acquire Verizon Media, the owner of Yahoo, AOL and other media businesses from Verizon Communications.