Lumen retains multinational enterprise customers under the terms of the deal
Lumen Technologies announced Wednesday plans to sell its Europe, Middle East and Africa (EMEA) business to Colt Technology Services in a transaction valued at $1.8 billion. The deal includes Lumen’s regional terrestrial and subsea networks, data centers and network equipment. Lumen’s CEO said the deal creates shareholder value, while helping the company focus on other strategic opportunities. The companies hope to complete the transaction by the end of 2023, subject to regulatory approvals.
“This transaction would enhance our focus so we can invest more efficiently in our most strategic opportunities – our key Enterprise and Quantum Fiber initiatives – and partner with regional leaders like Colt in Europe and Cirion in Latin America to continue serving our multinational enterprise customers,” said Jeff Storey, Lumen president and CEO.
This is likely one of the final public comments from Storey in his role as Lumen president and CEO. Lumen announced in September that Storey, 62, would retire on November 7, 2022. Storey will remain on through the end of the year to ensure a smooth transition, Lumen said. Replacing him is former Microsoft US president Kate Johnson.
Lumen announced the deal concurrently with its third-quarter FY2022 results, which missed Wall Street targets. That, combined with Lumen’s decision to eliminate its dividend for its current operating quarter, sent the stock down sharply.
But Lumen noted that the $1.8 billion purchase price Colt Technology offered the company is an estimated 11x multiple of Lumen’s 2021 EMEA business. What’s more, under the terms of the deal, Lumen will be able to continue to serve multinational enterprise customers. “Colt and Lumen will establish a strategic relationship that will enable Lumen to continue delivering a seamless experience for its multinational customers with needs in EMEA. The partnership will also allow Colt to continue serving the needs of the EMEA-based customers with service needs outside of EMEA,” the companies said.
Lumen announced in July that it had activated enterprise edge computing solutions in Europe: The company claimed 5 millisecond (ms) latency for 70% of enterprise demand in the U.K., France, Germany, Belgium and the Netherlands, with plans to expand to additional locations by the end of the year. Lumen’s edge computing services include Bare Metal, a pay-as-you-go dedicated hardware hosting service designed for single-tenant systems and protected data environments; Network Storage, which promises fast, scalable, and secure network storage for both enterprises and public sector organizations; Private Cloud, which provides pre-built infrastructure suited for high-performance private cloud computing applications; and Gateway, Lumen’s Multi-Access Edge Compute (MEC) platform intended for on-premises use.
Headquartered in London, England, Colt Technology Services is a multinational telecom and connectivity business owned by Fidelity Investments and investment firm Eight Roads. Colt’s IQ Network sports 400 gigabits per second (Gbps) optimization, and is distributed to more than 900 data centers and carrier hotels around the world. Colt boasts more than 200 cloud points of presence across 4 continents, and says it operates in 32 countries, 212 cities and 51 major metropolitans areas. The Lumen deal extends Colt’s network into additional countries, European cities and data centers it isn’t already operating in, the companies said. Most of the Lumen employees affected by the EMEA sale will join Colt after the transaction closes, the companies said.
Lumen recently completed its divestiture of much of its Incumbent Local Exchange Carrier (ILEC) business in the U.S. The company closed a $7.5 billion sale to Brightspeed, first announced in August 2021. Lumen retained 687,000 CenturyLink fiber subscribers in 16 states while Brightspeed parent Apollo Global obtained assets throughout the American Midwest and Southeast, and 59,000 fiber subscribers.
The Colt news comes only a couple of days after Lumen announced that it had won a $1.5 billion contract from the U.S. Defense Information Systems Agency (DISA). Under the terms of the deal, Lumen will provide DISA with the network infrastructure backbone to the U.S. Indo-Pacific Command. The deal comprises landline, Internet and spectrum DISA needs to transport data, imagery, video and voice traffic throughout the region.