Analyst(s): Futurum Research
Publication Date: November 9, 2026
Lumen is selling more services over existing connections and extending its reach across clouds with Alkira. The copper retirement plan will test how quickly the company can move customers to newer services and remove legacy costs.
What Is Covered in This Article:
- Lumen’s Q3 FY 2026 financial results
- More services per installed port
- AI demand for high-capacity wavelengths
- Copper retirement and customer migration
- Guidance and Final Thoughts
The News: Lumen Technologies (Nasdaq: LUMN) reported results for Q3 FY 2026, ended September 30, 2026. Revenue fell 12% year-over-year (YoY) to $2.72 billion, in line with Wall Street consensus of $2.72 billion, and included $27 million in previously deferred federal support revenue. Business revenue fell 4.5% YoY to $2.35 billion, and Mass Markets revenue fell 42% YoY to $369 million. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), excluding special items, fell 9.15% YoY to $715 million, while the corresponding margin rose to 26.3% from 25.5%. Net loss excluding special items narrowed 26.90% YoY to $144 million, and diluted loss per share excluding special items narrowed 30% YoY to $0.14.
“AI-driven demand for connectivity is fueling momentum in our Strategic revenue base. Customers are choosing our platform to simplify their networks and get more from every connection. As we modernize our portfolio, we’re strengthening the economics of our business and investing in what comes next,” said Kate Johnson, chief executive officer of Lumen Technologies.
Lumen Technologies Q3 FY 2026: Digital Growth Faces Legacy Revenue Pressure
Analyst Take: Lumen is using the same network to sell high-capacity links for artificial intelligence (AI) infrastructure and software-delivered services for enterprise customers. Digital revenue grew 86.7% YoY to $56 million, helped by Network-as-a-Service (NaaS) and Alkira, but remained small relative to the legacy business. Direct margins through Q3 FY 2026 averaged more than 80% across the Strategic portfolio versus about 65% for Legacy, giving the shift in mix a clear economic rationale. For enterprise buyers, combining fiber access and cloud orchestration can simplify provisioning, while preserving the ability to use multiple carriers remains important.
More Services per Installed Port
Lumen’s NaaS customer base exceeded 4,000, with active ports up 38% sequentially and active services up 35%. One in five Internet on Demand ports carried multiple services, and services added remotely can generate nearly 100% direct margin. Intelligent Internet combines on-demand connectivity with dedicated internet access (DIA), opening a digital sales channel to an installed base of more than 100,000 ports. Alkira extends that opportunity to customers managing connections across multiple clouds and data centers. Global medical insurer VUMI Group used Alkira to replace its legacy virtual private network with zero-trust cloud networking and exit a data center. The share of ports carrying multiple services is a stronger indicator of incremental profitability than customer count alone.
AI Demand for High-Capacity Wavelengths
Over the past 12 months, new wavelength installations for AI companies rose more than fivefold and accounted for more than one-third of new 400-gigabit wavelength installations. Strategic wavelength sales rose 22% sequentially, giving Lumen a second measure of demand beyond private fiber contracts. Lumen also reached its annual target of deploying 5 million new fiber miles funded by Private Connectivity Fabric (PCF) agreements more than two months early. The company signed another $700 million in PCF agreements through Q3 FY 2026, bringing the cumulative value of signed agreements to more than $13.5 billion. PCF generated $66 million in quarterly revenue against $269 million in related capital expenditures, illustrating the gap between deployment spending and recognized revenue. Faster turn-up of 400-gigabit services gives Lumen a way to compete for AI traffic while the larger fiber builds mature.
Copper Retirement and Customer Migration
Lumen plans to accelerate copper decommissioning in Florida, Iowa, Nevada, and Utah, which together represent about 25% of its copper network. Lumen is reducing the promotion of new copper services while continuing to meet service obligations. Moving customers to modern alternatives can remove the expense of maintaining parallel networks, but savings depend on when Lumen can retire the underlying infrastructure. The company can also sell recovered copper, with proceeds sensitive to recovery costs and commodity prices. For enterprise buyers with copper-based services across multiple sites, migration timelines and replacement options will matter as Lumen works through local regulatory requirements. The durable benefit will come from removing recurring maintenance costs while retaining customers through the transition.
Guidance and Final Thoughts
Lumen reaffirmed its FY 2026 guidance for adjusted EBITDA of $3.1 billion to $3.3 billion, capital expenditures of $3.2 billion to $3.4 billion, and free cash flow of $1.9 billion to $2.1 billion, each excluding special items. The free cash flow outlook includes $729 million in fiber-to-the-home divestiture proceeds classified as operating cash flow and a $420 million tax refund, including interest, but excludes cash taxes related to the divestiture. Management continues to target a return to Business revenue growth in FY 2028, with Alkira expected to support digital services expansion as copper retirement accelerates. Beginning in FY 2027, Lumen plans to include Intelligent Internet in its digital revenue category and provide pro forma comparisons to distinguish underlying growth from the reclassification of existing dedicated internet access revenue.
Lumen’s transformation depends on whether higher-margin Strategic services can expand quickly enough to offset declining legacy revenue and the costs of maintaining older networks. NaaS adoption and increasing services per installed port provide a route to generate additional revenue from existing infrastructure, while AI-driven wavelength demand supports utilization of its expanding fiber network. However, Digital revenue remains small relative to the broader business, and PCF deployments require substantial upfront investment before contracted revenue is fully recognized. Accelerated copper retirement could improve the cost structure, but customer migration and regulatory requirements will determine when savings materialize. If Lumen can increase service attachment, convert fiber investments into recurring revenue, and retire legacy infrastructure without significant customer losses, its improving revenue mix could support more durable margins ahead of the targeted FY 2028 Business revenue recovery.
See the full press release on Lumen Technologies’ Q3 FY 2026 financial results on the company website.
Declaration of generative AI and AI-assisted technologies in the writing process: This content has been generated with the support of artificial intelligence technologies. Due to the fast pace of content creation and the continuous evolution of data and information, The Futurum Group and its analysts strive to ensure the accuracy and factual integrity of the information presented. However, the opinions and interpretations expressed in this content reflect those of the individual author/analyst. The Futurum Group makes no guarantees regarding the completeness, accuracy, or reliability of any information contained herein. Readers are encouraged to verify facts independently and consult relevant sources for further clarification.
Disclosure: Futurum 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 Futurum as a whole.
Read the full Futurum Group Disclosure.
Other Insights From Futurum:
Lumen Technologies Q2 FY 2026: AI-Era Connectivity Drives Strategic Shift
Lumen’s Nasdaq Debut Puts Alkira at the Center of Its AI Networking Pitch
Can Samsung and Verizon Make Network Sensing Useful for Venues?
Author Information
Futurum Research
Futurum Research delivers forward-thinking insights on technology, business, and innovation. Content published under the Futurum Research byline incorporates both human and AI-generated information, always with editorial oversight and review from the expert Futurum Research team to ensure quality, accuracy, and relevance. All content, analysis, and opinion are based on sources and information deemed to be reliable at the time of publication.
The Futurum Group is not liable for any errors, omissions, biases, or inadequacies in the information contained herein or for any interpretations thereof. The reader is solely responsible for any decisions made or actions taken based on the information presented in this publication.
