(Bloomberg) — AT&T Inc. agreed to buy the consumer fiber operations of Lumen Technologies Inc. for $5.75 billion, expanding its fast broadband service in major cities like Denver and Las Vegas.
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AT&T will pay cash for the unit of Lumen, according to a statement Wednesday. Talks between the companies were reported earlier by Bloomberg News. The sale is subject to regulatory approval and is expected to close in the first half of next year.
The deal helps AT&T increase its long-term goal of putting its fiber-optic lines within reach of more homes and businesses. The Dallas-based wireless and broadband company now says it aims to reach 60 million locations by 2030, about double where AT&T Fiber is available today. Lumen had said earlier that the consumer fiber business didn’t fit with its focus on serving enterprise customers.
Lumen has 1 million fiber customers and reaches more than 4 million locations across 11 US states, AT&T said.
As part of the transaction, AT&T will form a new subsidiary that will hold the acquired assets. After closing, AT&T plans to sell partial ownership of the subsidiary to an equity partner that will co-invest in the business. AT&T expects to identify the partner and close a deal within about six to 12 months of completing the transaction with Lumen.
AT&T said the structure will help support the expansion of AT&T Fiber outside of the phone giant’s traditional landline operations. The company also reiterated its 2025 financial guidance.
In 2022, AT&T announced a similar partnership with BlackRock Inc. called Gigapower LLC.
Lumen advanced as much as 25% to $4.77 in extended trading. AT&T was little changed.
Fiber and telecommunications have become a hotbed of dealmaking. Earlier this month, the US Federal Communications Commission approved the sale of Frontier Communications to Verizon Communications Inc. Frontier had billed itself as the “largest pure-play fiber internet company in the US.”
On May 16, Charter Communications Inc. agreed to combine with closely held Cox Communications in a $34.5 billion cash-and-stock deal that would unite two of the biggest US cable providers. The combined company would be the top broadband operator in the US, and increase Charter’s subscriber base by more than 20%, Bloomberg Intelligence analyst Geetha Ranganathan said at the time.
