Lumen plans to redefine enterprise networking

Speaking at the New Street Research and BCG Future of Connectivity Leaders Conference, Lumen CFO Christ Stansbury outlined the company’s strategic focus for the coming years.

While refusing to confirm or deny rumors of plans to exit the consumer sector, Stansbury noted that, without a wireless offering, Lumen cannot compete in a market with a growing demand for consolidated fiber and wireless bundles.

“We’ve been very public in saying that this was a market that needed to consolidate: We’ve said that for the last three years, and I think that’s obviously starting to happen,” said Stansbury. “We’ve also said we wouldn’t be the consolidator, and given the footprint we have, given the assets we have, there’s a lot of interest.”

Stansbury reported that a divesture from the consumer fiber business would reduce Lumen’s debt by 25% while simultaneously eliminating roughly $1 billion a year in capital investments. He also emphasized that Lumen has no intention of selling any of its enterprise assets and is prepared for a longer-term methodical decommissioning of copper assets.

Private Connectivity Fabric and Enterprise

Lumen has secured $8.5 billion in Private Connectivity Fabric (PCF) deals, with another $3.5 billion in the pipeline. Stansbury noted that the initial $8.5 billion monetized unused conduit that was buried 25 years ago which is now highly valuable for hyperscalers building AI infrastructure. The remaining $3.5 billion will involve new builds.

While these PCF deals represent a significant value for the company, Lumen doesn’t see them as its long-term future, with Stansbury emphasizing a focus on the service layer and enterprise solutions.

According to Stansbury, Lumen’s future lies in transforming enterprise networking. Lumen aims to change accessing network connectivity from a weeks-long process to an on-demand service.

“Historically, if you want network connectivity, if you need to get from A to B, you call your provider, and they’ll tell you that ‘we’ll get that figured out over the coming weeks if not months,’” said Stansbury.

By contrast, Lumen aims to enable “port-to-port connectivity on demand anytime, anywhere” while also tackling latency issues faced by growing AI demands.

“Today, if you’re a large enterprise and you want to access your own data that sits in the third-party cloud, you’ve got to go through a third-party location, pay a cross connect fee for every bit that runs through that wire back and forth to access the data. It’s slow, it’s clunky, and it’s really expensive,” said Stanbury. “In our network, there will be direct cloud on-ramps. So, from your enterprise to the cloud data, you could pull it down to our edge of network compute environment, manipulate the data, do what you need to do around your API development or whatever it is, and then push it back where it needs to go, all on demand, all without paying cross connect fees in a really low latency way.”

Stansbury also noted opportunities for services like security and edge compute that can be layered on top of the network offering.

“Everybody else in our space is focused on the consumer side and harvesting cash from enterprise to fuel those desires. So that’s our right to win,” he said.

Revenue inflection point

While currently in decline, Lumen expects to see enterprise revenue growth beginning in 2028 or 2029, with Stansbury noting that 42% of Lumen’s revenue and over 50% of its sales are coming from newer growth products.

Stansbury also reported that cost savings are helping to service the expected growth, noting a significant opportunity lies in converging the company’s four networks (CenturyLink, Level 3, TW Telecom, and Global Crossings) into one.

“From an EBITDA standpoint,” he said, “there are really two things that are driving the inflection. One is modernization and simplification; the other is the rate of decline in revenue will start to slow.”

Looking ahead, Stansbury envisions Lumen as “the trusted network for AI,” with capabilities that extend beyond basic connectivity.

“It’s not just about connectivity,” he said, “It’s about unlocking the value in the network for CIOs, for large enterprise to consume their data more seamlessly to be able to actually execute AI and learning algorithms in a way that works for large enterprise.”