Lumen Technologies Launches Sale of Consumer Fiber Unit to Cut Debt

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Lumen Technologies (formerly CenturyLink) has begun the process of selling its consumer fiber operations, as part of a broader strategy to offload its legacy mass markets business and reduce its significant debt. The company, which provides high-speed internet services to residential customers, is pivoting towards growth in artificial intelligence while grappling with declining sales from its traditional services.

Strategic Shift

Lumen has enlisted Goldman Sachs to explore interest in its fiber business from potential buyers, including industry competitors. The company is also considering options such as selling a stake in the unit or entering a joint venture with a strategic partner. Talks are still in the early stages, and no deal has been confirmed. This move follows Lumen’s attempt earlier this year to explore options for its mass markets business, which houses the fiber operations. According to Lumen’s CFO, Chris Stansbury, the fiber business is valuable but may be better suited to a company with a wireless offering.

Potential Deal Valuation

The sale could involve splitting the consumer fiber unit from its enterprise fiber business, which provides internet services to large customers and will not be sold. The consumer fiber business, which serves 4.1 million fiber-enabled locations, could be valued at between $6 billion and $9 billion depending on the structure of the transaction.

Business Transformation

Lumen has undergone several transformations in recent years, including the $7.5 billion sale of local exchange carrier assets in 2021. To reverse its fortunes, Lumen has restructured its debt and focused on securing new contracts, including partnerships with major tech companies like Microsoft, Meta, Alphabet, and Amazon. These contracts are part of Lumen’s shift away from its traditional broadband and voice services, which have been under pressure due to outdated technology.

Financial Performance

Lumen’s efforts to diversify have been supported by a surge in contracts, including a $5 billion deal to provide AI connectivity to data centers. Despite these wins, the company continues to face challenges, as evidenced by an 11.5% drop in third-quarter revenue compared to the previous year. However, its fiber broadband business grew 16.6% in the same period. Lumen’s market value has risen significantly this year, reaching $6.2 billion, but the company still carries substantial long-term debt of $18.1 billion.

 

Kadokawa Shares Fall as Sony Announces Investment, Not Acquisition

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Shares of Japan’s Kadokawa, a media conglomerate known for its role in creating the hit game “Elden Ring,” plummeted by their daily limit on Friday after the company announced a capital partnership with Sony Group instead of the expected full acquisition. The two companies revealed that Sony would invest approximately 50 billion yen ($317 million) in Kadokawa by acquiring a 10% stake through a new share issuance.

Stock Impact

Kadokawa’s stock fell sharply by 15.95% on Friday, ending the day at 3,689 yen, the daily limit, as sell orders overwhelmed the market. This comes after a surge of about 45% in Kadokawa’s stock price over the past month, fueled by reports of potential acquisition talks with Sony. Analysts pointed out that investors had expected a premium offer through a tender bid, which did not materialize, contributing to the sharp drop in Kadokawa’s share price.

Market Reaction

The investment from Sony, while making it the largest shareholder in Kadokawa, was seen as a disappointment by some market participants, especially given that the sale price of 4,146 yen per share was a discount of more than 5% compared to Kadokawa’s closing price the day before. Analysts like Shunki Nakamura from Jefferies also noted that the move would be dilutive due to the new share issuance.

Strategic Goals

The deal between Sony and Kadokawa is aimed at enhancing Sony’s position in the growing anime market, with Kadokawa’s publishing business playing a key role in the creation and distribution of anime content. However, while the partnership stops short of a full acquisition, there is potential for increased collaboration and future moves toward a larger stake in Kadokawa, according to analysts.

Sony’s Position

Despite the negative reaction in Kadokawa’s stock, Sony’s shares rose by 2% in the morning and ended the day with a modest 0.7% gain. Traders noted that this more limited partnership with Kadokawa would free up Sony to allocate capital to other projects.

 

Singapore’s Bolttech Raises Over $100 Million in Series C Funding

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Bolttech, a Singapore-based insurance technology firm, has successfully raised more than $100 million in its latest Series C funding round, bringing its valuation to $2.1 billion. This round was led by Dragon Fund, a subsidiary of Mitsubishi UFJ Financial Group, and fintech direct lender Liquidity Group. The funding will support bolttech’s global expansion strategy.

Funding and Company Growth

The Series C funding round represents a significant increase from the $1.6 billion valuation in its previous Series B round, which took place in May 2023. Bolttech, founded in 2020, operates a digital platform that facilitates the buying and selling of insurance and protection products. The company’s platform connects insurers, distributors, and customers in over 35 markets across North America, Asia, Europe, and Africa.

Investment Details

In addition to Dragon Fund and Liquidity Group, other notable investors in the Series C round include UK investment management firm Baillie Gifford and the private equity arm of insurer Generali, Lion River. The latest investment marks a continued interest in the insurtech sector, which saw a peak of $1.38 billion in global investment in Q3 2023, driven in part by the growing influence of artificial intelligence in the industry.

Additional Funding

Bolttech also secured additional financial backing in 2023. In September, the company extended its Series B round, raising $246 million, including $50 million from impact investment firm LeapFrog. Last month, it closed a $50 million venture debt facility with HSBC.