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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are part of Lumen’s shift away from its traditional broadband and voice services, which have been under pressure due to outdated technology.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.

 

US Agencies to Brief House on Chinese “Salt Typhoon” Telecom Hacking

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U.S. government agencies are set to hold a classified briefing on Tuesday for the House of Representatives regarding China’s alleged cyber espionage campaign, known as “Salt Typhoon.” The operation reportedly targeted American telecommunications companies, attempting to steal sensitive data, including metadata about U.S. calls.

The briefing, scheduled for 2:15 p.m. ET, will involve key agencies such as the FBI, the Office of the Director of National Intelligence, the Federal Communications Commission (FCC), the National Security Council, and the Cybersecurity and Infrastructure Security Agency (CISA). This session follows a similar briefing last week for senators.

Details on the Breach

The White House recently revealed that at least eight U.S. telecommunications companies and telecom infrastructure firms had been impacted by the Salt Typhoon campaign. A significant amount of metadata related to U.S. communications was reportedly stolen.

While Chinese officials have denied the allegations, calling them disinformation, there is growing concern within the U.S. government over the scale of the breach and its implications for national security and privacy.

Legislative and Regulatory Responses

Senator Ron Wyden has indicated he is working on draft legislation in response to the breach, while Senator Bob Casey expressed concerns about the timing of Congressional action, noting that a resolution might not come until next year.

Additionally, a Senate Commerce subcommittee will hold a hearing on Wednesday to examine how security threats, like Salt Typhoon, pose risks to communication networks and review industry best practices. Tim Donovan, CEO of the Competitive Carriers Association, is scheduled to participate in the hearing.

Security Concerns and Industry Impact

Senator Richard Blumenthal emphasized the alarming scope of Chinese hacking into U.S. telecom networks, describing it as “mind-boggling” and expressing deep concern about the lack of assurances for the public. The hacking campaign reportedly targeted major telecom companies, including Verizon, AT&T, and Lumen, extracting sensitive data like telephone audio intercepts and call records.

Looking Ahead

The Salt Typhoon breach has sparked debates about cybersecurity readiness and the need for stronger protections against foreign cyber espionage. U.S. lawmakers and regulators are under pressure to address vulnerabilities in the telecommunications infrastructure and reassure the public on the measures being taken to secure their communications.

Brazil Orders Suspension of Elon Musk’s X Platform Amid Legal Feud

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Brazil’s telecommunications regulator announced on Friday that it is moving to suspend access to Elon Musk’s X platform, formerly known as Twitter, following a court order from Supreme Court Justice Alexandre de Moraes. This suspension was triggered after X missed a deadline to appoint a legal representative in Brazil, as required by law.

Musk has fiercely opposed the court’s ruling, accusing Justice Moraes of attempting to enforce unjustified censorship. Moraes, however, has maintained that regulation is necessary to curb hate speech on social media platforms. The judge’s decision is the latest development in a prolonged dispute with Musk, which has now escalated to the point of a potential shutdown of X in one of its largest markets.

Despite the court order, X remained accessible in Brazil late on Friday. Some users, however, reported that their access had already been blocked by local telecommunications carriers, which planned to fully enforce the suspension by midnight.

In addition to the suspension, the court also froze the bank accounts of Musk’s satellite internet provider, Starlink, in Brazil. The judge has ordered X to pay more than $3 million in fines and to comply with other legal mandates before service can be restored in the country. Telecommunications regulator Anatel has been tasked with implementing the suspension, which will require telecommunication companies to block X’s traffic and prevent users from bypassing the ban using virtual private networks (VPNs). Moraes warned that those who continued to access X via VPNs could face daily fines of up to 50,000 reais (around $9,000).

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While Apple and Google were initially ordered to remove X from their app stores and implement anti-VPN measures, Justice Moraes later reversed this part of the order. Both companies declined to comment.

Brazil’s Supreme Court judges wield considerable power to make unilateral decisions, and in this case, Moraes’ stance has been supported by a majority of the 11-member court. The roots of the conflict trace back to a previous Moraes order demanding X block accounts accused of spreading misinformation and hate speech, which Musk criticized as censorship. Although Musk closed X’s offices in Brazil in response, he has continued to make the platform available to users in the country.

Musk, who also owns 40% of SpaceX and leads electric vehicle giant Tesla, derided Brazil’s President Luiz Inacio Lula da Silva as Moraes’ “lapdog,” further heightening tensions. President Lula responded firmly, stating that all companies, regardless of their wealth or influence, must comply with Brazilian law.

The situation remains tense as Brazil pushes for compliance from Musk’s ventures, with no signs of backing down from the court or government.