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Still operated under the CenturyLink brand, Lumen’s ILEC (incumbent local exchange carrier) business with operations in 20 U.S. states will be sold to Apollo Funds for $7.5 billion. Lumen’s ILEC business operations include wholesale and copper-served enterprise customers and assets but are primarily serving consumer and small businesses in 20 Midwest and Southeast states.
“This transaction is an important step in our continued efforts to transform Lumen and drive future growth for our company,” said Jeff Storey, President and CEO at Lumen. “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.”
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The purchase would offer Apollo Funds with a robust, scalable local network, as well as operational and back-office support, in order to satisfy the growing demand for high-bandwidth connection and fiber technology. Among the assets being bought in the 20 states are:
- Local fiber and copper network
- Broadband and voice for consumer, enterprise and wholesale customers
- Fiber and copper connectivity to enabled buildings
- Connectivity to tower sites
- Central offices
The deal is projected to be leverage neutral, with a completion date in the second half of 2022, subject to usual closing circumstances such as regulatory clearances.
“The team at Lumen has built a great business and we see an incredible opportunity to provide leading edge, fiber-to-the-home broadband technology to millions of its business and residential customers,” said Aaron Sobel, Private Equity Partner at Apollo. “Our investment will help accelerate the upgrade to fiber optic technologies, and we are excited to have such a high-caliber management team ready to bring faster and more reliable internet service to many rural markets traditionally underserved by broadband providers.”
Citi, Goldman Sachs, Bank of America, and Morgan Stanley served as financial advisors to Lumen in the transaction and Jones Walker served as legal counsel. Advisors to the Apollo Funds include Mizuho, LionTree, Barclays and Credit Suisse as financial advisors; Altman Solon as telecommunications, media and technology consultant; and Paul, Weiss, Rifkind, Wharton & Garrison LLP as lead legal counsel, together with Jenner & Block LLP and Morgan Lewis & Bockius LLP as regulatory counsel.
For more than 20 years, Lumen has owned and maintained subsea networks globally. The company has approximately 450,000 route fiber miles available and while serving clients in more than 60 countries.
Apollo Funds is a worldwide alternative asset management with a fast rate of expansion. Apollo had about $461 billion of assets under management as of March 31, 2021.
