- AT&T reportedly wants to buy Lumen's consumer fiber business for $5.5B
- This is probably the most likely telecom M&A deal on the horizon, according to New Street Research
- It's unclear whether AT&T plans to acquire just Lumen's fiber assets or its entire Mass Markets biz, which includes copper
AT&T is reportedly in talks to buy Lumen's consumer fiber business for $5.5 billion, according to Bloomberg. While the extent of the deal is unclear at this time, the deal is the most likely telecom M&A deal on the horizon according to a note from New Street Research.
Unlike its competitors T-Mobile and Verizon, AT&T thus far hasn't made many moves in the fiber M&A space. CFO Pascal Desroches in February said, "unlike our peers, we're not compelled to do anything." However, he didn't entirely rule out the possibility.
Rumors have been going around since last year that Lumen could offload its Mass Markets unit, as the company pursues growth in AI and the data center space. Lumen CEO Kate Johnson said it plainly in November: it’s difficult to imagine long-term success for Lumen in the traditional telco space.
Both AT&T and Lumen declined to comment on the report. However, a Lumen spokesperson told Fierce, "as previously stated publicly, we continue to explore a range of strategic options to maximize value of our consumer fiber business and focus on core enterprise services. "
While this recent Bloomberg report isn't too surprising, the $5.5 billion price tag "looks too low," said NSR's Jonathan Chaplin in a note to investors Tuesday. This could mean Lumen is selling just its fiber assets "from the central office to the home," he wrote, "but not the central office itself and not the fiber into the central office."
"The purchase would leave the buyer reliant on Lumen for access to critical infrastructure," Chaplin added.
Given that AT&T has lately doubled down on its copper retirement ambitions, the operator may not necessarily want Lumen's copper as part of the deal. As Calix's Teresa Mastrangelo noted on LinkedIn, Lumen has passed "less than 20% of its premises with fiber."
The fiber assets alone are the most attractive for AT&T, "but sometimes you have to buy the chaff with the wheat," said Recon Analytics Principal Roger Entner. The FCC's recent move to ease copper retirement restrictions may pave the way for more telecom M&A activity, as ILECS that have upgraded some but not all of their network to fiber could become more appealing to buyers.
Still, "decommissioning copper is a huge pain," Entner said. "Just because the FCC says you can, doesn’t mean you can actually do it easily." Both AT&T and Lumen have tried - and failed - to end their carrier of last resort (COLR) obligations in certain states. The new FCC rules are unlikely to sway states on that front.
Mastrangelo said perhaps AT&T could use Lumen's assets to expand Gigapower, AT&T's wholesale open access network. AT&T launched Gigapower in 2023 as a joint venture with BlackRock to expand beyond its traditional footprint, but AT&T so far is the only Gigapower tenant.
"From a strategic perspective, the Lumen properties almost make more sense for Gigapower where they want to be the first fiber provider in markets they go after," she added.
Read our recent coverage of Lumen:
Lumen taps Ciena to supercharge AI network capacity
Lumen eyes a $15B market by stealing share from carrier-neutral facilities
AT&T bumps fiber-passing goal to 50M and creates a landline phone replacement
Listen to a podcast with Lumen's CEO Kate Johnson: The Five Nine: Building a new network - and telco - for AI with Lumen
Update 3/26/2025 10:20 am ET: This story has been updated with commentary from NSR's Jonathan Chaplin and Calix's Teresa Mastrangelo.
Update 3/26/2025 11:50 am ET: This story has been updated to include comment from Lumen and Recon Analytics' Roger Entner.