By Juby Babu
May 5 – Digital networking services company Lumen Technologies beat Wall Street estimates for first-quarter revenue on Tuesday and announced it would buy networking platform Alkira for $475 million in cash.
The acquisition is expected to accelerate Lumen’s push into cloud-to-cloud and data center interconnect services and expand its total addressable market to about $70 billion through Alkira’s global footprint and cloud-native platform.
Here are more details:
• According to Lumen, the deal is unlikely to have a near-term impact on margins, but is expected to boost earnings as the digital platform grows, while improving long-term free cash flow and lowering buildout costs and risk.
• “The acquisition of Alkira substantially completes the digital platform that we had to build. It accelerates it, it is capex that we do not have to invest now,” CFO Chris Stansbury told Reuters in an interview.
• Lumen reported revenue of $2.9 billion for the first quarter ended March 31, above analysts’ average estimate of $2.83 billion, according to data compiled by LSEG.
• “We had a very strong quarter on private connectivity fabric (PCF), because we lit up some State of California business,” Stansbury said, adding that PCF growth was in the mid-single digit and Lumen’s digital offerings were a “big piece” of it.
• The company’s quarterly adjusted loss came in at 47 cents per share, compared with expectations of a 13-cent per share loss.
• Lumen raised its annual free cash flow forecast to a range of $1.9 billion to $2.1 billion, from an earlier projection of $1.2 billion to $1.4 billion, as its auditors determined that $729 million of the cash inflows associated with the sale of its consumer fiber operations to AT&T should be classified as operating cash flows.
• In February, Lumen was selected to expand Anthropic’s fiber network across North America, contributing to its nearly $13 billion in total PCF contracts.
(Reporting by Juby Babu in Mexico City; Editing by Diti Pujara)
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