CenturyLink sells copper network in 20 states instead of installing fiber

A CenturyLink service van viewed from behind, with several CenturyLink logos visible.
Enlarge / A CenturyLink service van parked in Santa Fe, New Mexico, on May 2, 2019.

CenturyLink is selling much of its 20-state copper network to a private equity company, allowing the telecommunications company to withdraw from rural areas where it does not plan to install fiber technology to the home. CenturyLink agreed to sell the networks for $ 7.5 billion to Apollo Funds, a private equity fund operated by Apollo Global Management. Apollo will also remove $ 1.4 billion of debt from CenturyLink’s hands.

Under the deal expected to close in the second half of 2022, Apollo will acquire CenturyLink’s ILEC (incumbent Local Exchange Operator) business in all 20 states, including “customers and assets of consumers, small businesses, wholesalers, and primarily businesses. with copper services “. ” to Press release Said yesterday. The pending sale networks reach seven million residences and businesses, but only have 200,000 fiber deployments to the premises.

CenturyLink said it will maintain its ILEC networks in 16 states where it has 2.4 million fiber-to-premises deployments among 21 million homes and businesses, and said these networks have “significant overlap” with its “business and fiber-to-premises” . housing construction opportunities. “

CenturyLink recently renowned himself “Lumen” but still uses the Brand Name CenturyLink for residential and small business customers while using the Lumen brand for business customers.

Homes languish on old copper lines

“In a conference call with investors, Lumen CEO Jeff Storey said that 70 percent of the markets that Lumen will retain in the deal are in urban and suburban areas and that those are the types of markets in which Lumen is more likely to invest in broadband service upgrades to its fiber-based offering known as Quantum “, Telecompetitor wrote.

In the states where CenturyLink networks are sold, Storey said, “we knew that it was unlikely that we would prioritize investment in these markets over our other opportunities in the company and Quantum fiber.” The networks for sale pending have 1.3 million CenturyLink Internet subscribers, nearly all on copper-based DSL. About 59,000 of those subscribers use fiber.

Apollo will also serve CenturyLink landline customers. CenturyLink stopped reporting the number of phone subscribers it has a few years ago, but the company had 10.3 million dial-up lines at the end of 2017. More recently, the “voice and other” category accounted for $ 518 million of the $ 1.4 billion. million revenue in the company’s mass market category in S2 2021. Including the residential and commercial segments, the company’s voice services earned $ 1.5 billion of the total $ 4.9 billion in quarterly revenue. The remainder comes from enterprise IP and data services, computing and application services, and fiber infrastructure services.

Where are the networks

Networks sold operate under the CenturyLink name and are located in Alabama, Arkansas, Georgia, Illinois, Indiana, Kansas, Louisiana, Michigan, Mississippi, Missouri, New Jersey, North Carolina, Ohio, Oklahoma, Pennsylvania, Carolina del South, Tennessee, Texas. , Virginia and Wisconsin.

CenturyLink / Lumen operates both ILEC and CLEC (Competitive Local Exchange Operators), the latter of which generally rents lines to incumbents rather than implementing their own. The company will maintain CLECs in the 36 states in which it operates and will maintain ILECs in Arizona, Colorado, Florida, Idaho, Iowa, Minnesota, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oregon, South Dakota, Utah , Washington and Wyoming. CenturyLink / Lumen “will retain 3.4 million broadband subscribers, including 687,000 fiber subscribers,” Telecompetitor wrote.

Apollo promises fiber upgrades

The sale could continue a long-term trend of DSL customers in rural areas being denied fiber upgrades while old copper networks deteriorate. CenturyLink is unlikely to upgrade the networks it has already agreed to sell, but will continue to operate them for another year. It is not clear how much fiber deployment Apollo will undertake, but the company saying The company’s investment “will help accelerate the upgrade to fiber optic technologies, providing faster and more reliable Internet service to many rural markets traditionally underserved by broadband providers, while providing the best customer service in the world. his class”.

CenturyLink / Lumen has focused more on serving large companies in recent years, a strategy driven in part by its acquisition of Level 3 in 2017.


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