Search

Lumen Sells EMEA Assets to Colt for $1.8B — The Driver Behind That Move and a Look at What’s Ahead for the Company Now

The News: Lumen has announced that it will sell its European, Middle East, and Africa (EMEA) assets and operations to Colt for $1.8B. The deal includes the EMEA business, data centers, terrestrial and subsea cabling, and other regional network equipment. The deal is expected to be closed in late 2023. Read the full Press Release from Lumen here.

Lumen Sells EMEA Assets to Colt for $1.8B — The Driver Behind That Move and a Look at What’s Ahead for the Company Now

Analyst Take: Lumen’s sale of its EMEA assets to Colt for $1.8 billion didn’t come as a surprise. For several years now, it has been clear that Lumen didn’t like being categorized as a carrier or even simply a network provider, and in July of 2021, the company sold their LATAM business and network assets to Stonepeak for $2.7 billion and made the point very clear. They’ve reiterated their point now by selling their EMEA business (except the CDN and Vyvx products) and network assets to Colt for $1.8 billion.

This sale includes roughly 100,000 km of fiber-optic cable, including 39,200 km of subsea cabling, spread across 30+ countries. This transaction will involve the rehoming of almost 1,400 employees, and any customer contracted in EMEA. These network assets will provide a substantial expansion to the Colt network. The two companies expect to strike an even tighter strategic arrangement in the coming months to make this transition as seamless as possible and help both companies manage their multi-national customers.

In return for all of this, Lumen receives 1.8 billion dollars; a reported 11x EBITDA multiple on the valuation of that business. They intend to put this money to work, continuing their mission to be a technology company focusing on next-gen apps and services that, yes, run on networks, but that doesn’t mean they have to own them.

The traditional capital model of a telco or network provider is incredibly capital-intensive, requiring massive upfront investments that won’t pay off for a decade or more. When compared to the hot and fast capital cycles in a software and services technology company with higher multiples and less capital-intensive investments, the boardroom attraction of a, yes, smaller but higher margin business becomes very clear.

So, what’s ahead for Lumen? I expect that this bit of financial engineering will pay off nicely for the company. They’ve created a $4.5 billion war chest from the two recent sales to help them push forward on their mission to provide excellent customer experiences that live on top of network, cloud, and security platforms — and that’s no small undertaking. Lumen has proven a nimble and capable provider of UC solutions. I look forward to watching the company continue iterate and evolve as this deal closes and they can accomplish their move away from the carrier/network provider brand identity. I think we’ll see some good things ahead.

Disclosure: Wainhouse Research, part of The Futurum Group family of companies, is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.

Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of Wainhouse Research as a whole.

Other insights from Wainhouse Research:

Cisco Extends Webex Go, its Native Mobile Calling Capability, to the UK

Crestron Announces the AirMedia AM-3000 for Digital Signage and Wireless Presentation

Wainhouse Live! From the Show Floor with Lumen Technologies at Zoomtopia 2022

The original version of this article was first published on Wainhouse Research.

Image Credit: Lumen

Author Information

Sean is a Senior Analyst strategically focused on cloud-based collaboration and its impact on worker productivity and human connection. Sean provides research on market sizing and forecasts, product and service evaluations, and end user/buyer insight.

Sean is a trusted advisor to and assists industry vendors and enterprises with workplace communications and collaboration strategies, market entry and product assessment, product portfolio analysis, and sales enablement services.

Prior to Wainhouse, now a part of The Futurum Group, Sean was the Chief Product Officer at PGI, owning the product strategy and roadmap for a full suite of B2B and B2B2C SaaS communications products including an enterprise grade phone system, audio meetings, video meetings, messaging, video webinars, high touch attended audio conferences and massively scaled video webcasts.

Sean holds a Bachelor of Science in International Business from University of Colorado, Boulder.

SHARE:

Latest Insights:

An assessment of 5G Turnaround Indicators Including Samsung’s Fiscal Q1 2024, 5G/eSIM Expansion, 5G Fund Revival, and T-Mobile’s Blink Smart Home Package
The Futurum Group’s Ron Westfall and Olivier Blanchard review potential indicators of improving 5G prospects in 2024 including Samsung’s surging Q1 2024 financial results amid AI’s rising tide, growing worldwide 5G connections plus eSIM expansion, the FCC proposing revival of the $9 billion 5G Fund for Rural America, and T-Mobile’s creative new Blink Smart Home bundle package.
In this episode of Infrastructure Matters, hosts Steve Dickens, Camberley Bates, and Krista Macomber take on the Mainframe’s 60th birthday, how AI lifts all boats, Memcon 2024 conference and the Rubrik IPO and what DSPM means.
In this episode of Enterprising Insights, host Keith Kirkpatrick discusses the news coming out of NetSuite’s SuiteConnectNY event, focusing on new product enhancements around AI, and a new connector used to link multiple instances of the product.
Google’s Hybrid Solution Addresses Nuanced Requirements of Modern Workloads, Including Data Sovereignty, Security Concerns, and Data Gravity
Steven Dickens, Vice President and Practice Lead at The Futurum Group, provides his insights into the strategic evolution of hyperscale cloud providers into on-premises data centers and the implications for modern enterprises.