AT&T's Acquisition of Lumen's Fiber Network: A Double-Edged Sword

Last week, Lumen Technologies (formerly CenturyLink) announced its intention to sell its residential fiber network to AT&T. This deal, valued at $5.75 billion, is set to significantly expand AT&T's fiber footprint, but it also raises serious concerns for Lumen’s workers and customers. The more profitable fiber network, built and maintained by CWA members, will be transferred to a new subsidiary called “NetworkCo,” which will then be partially sold to an unnamed private equity partner. This complex transaction has sparked a flurry of reactions from industry experts and labor unions alike.

The Communications Workers of America (CWA), which represents workers at both AT&T and Lumen, has expressed significant concerns about the structure of the transaction and its potential impact on employees and customers. CWA President Claude Cummings Jr. stated, "Our union’s leadership will work with both companies to ensure that our members are respected and protected so that they can continue providing the high-quality service that customers deserve." The union's concerns stem from AT&T's previous experience with similar subsidiaries, such as Gigapower, which has been criticized for relying heavily on multi-tiered subcontracting and temporary staffing agencies. This approach has led to numerous incidents of damage to public rights-of-way and preventable underground utility hits, raising serious public safety concerns.

CWA District 7 Vice President Susie McAllister emphasized the union's commitment to ensuring high-quality fiber deployment. "Our members care deeply about the customers and communities we serve. We have fought to ensure that fiber buildout is done right, with high-quality networks built by experienced union technicians. AT&T’s stated plans for Lumen’s home fiber business put that at risk." McAllister added that the CWA intends to engage regulators and elected officials to address these concerns as the acquisition process unfolds.

CWA District 3 Vice President Richard Honeycutt echoed these sentiments, emphasizing the need for AT&T and Lumen to prioritize customers and workers over shareholder interests. "Lumen’s customers deserve a first-class fiber network, and that’s what CWA members deliver. Before this transaction is approved, AT&T and Lumen must commit to maintaining a well-trained, directly hired union workforce and make sure that customers who depend on Lumen’s copper network are not left behind."

The potential long-term financial benefits and risks for AT&T and Lumen in this transaction are multifaceted, and they could significantly influence the companies' stock performance. For AT&T, the acquisition of Lumen's residential fiber network presents an opportunity to significantly expand its fiber footprint, potentially increasing revenue and market share. The deal includes about 1 million fiber subscribers across more than 4 million fiber locations, which will transition to AT&T Fiber customers. This expansion will allow AT&T to offer its fiber services to more customers, potentially increasing revenue and market share.

However, the integration of Lumen’s fiber assets into AT&T’s network could be complex and costly. There may be technical and operational challenges that could delay the realization of the expected benefits. Additionally, the transaction is subject to regulatory approval by the Department of Justice as well as other customary closing conditions. Any delays or complications in the regulatory process could impact the timeline and financial outcomes of the deal.

For Lumen, the sale of its residential fiber business will result in the loss of a significant revenue stream. However, the cash proceeds from the sale will help Lumen trim its debt pile by $4.8 billion and improve cash flow by reducing interest expenses by more than $300 million annually. This financial flexibility could allow Lumen to invest in growth opportunities and innovation, such as low-latency technology critical for supporting artificial intelligence workflows.



In conclusion, the acquisition of Lumen's residential fiber network by AT&T presents both opportunities and challenges for both companies. The long-term financial benefits and risks will depend on the successful integration of Lumen’s assets into AT&T’s network and Lumen’s ability to execute its new strategic focus. These factors will likely influence the companies' stock performance, with potential for growth if the benefits are realized and risks are managed effectively. As the acquisition process unfolds, it will be crucial for AT&T and Lumen to address the concerns of the CWA and ensure that any transition maintains the workforce's ability to deliver reliable, high-quality service. The CWA's engagement with regulators and elected officials will also be essential in addressing these concerns and safeguarding the interests of its members and the customers they serve.