Wednesday, 22 September 2021

Lumen sells LatAm network to Stonepeak for $2.7bn

by Harry Baldock, Total Telecom
Tuesday 27 July 21

The move comes as Lumen begins to strip its non-core assets in favour of paying down debt and preparing for expansion in more lucrative markets

In recent months, Lumen, formerly CenturyLink, has been seeking to divest itself of various assets in an attempt to pay down its debt. In fact, earlier this month the company was rumoured to be in talks with Apollo Management Global over the potential $5 billion sale of its consumer operations in the US. Now, furthering this strategy, Lumen has announced the sale of its Latin American business to investment firm Stonepeak for around $2…

In recent months, Lumen, formerly CenturyLink, has been seeking to divest itself of various assets in an attempt to pay down its debt. In fact, earlier this month the company was rumoured to be in talks with Apollo Management Global over the potential $5 billion sale of its consumer operations in the US.

Now, furthering this strategy, Lumen has announced the sale of its Latin American business to investment firm Stonepeak for around $2.7 billion.

Australia’s largest pension fund, AustralianSuper, is a co-investor alongside Stonepeak. 

“This transaction unlocks value for our shareholders while allowing us to maintain our global presence through our strategic relationship with the New LATAM Company,” said Lumen President and CEO Jeff Storey. “This transaction allows Lumen to focus investments in key areas of the business to drive future growth while providing flexibility for our capital allocation strategy.”

The deal would see the new company renamed and become independent, though Lumen notes that a strategic relationship with the new business will be maintained, in order to “service joint customers in the region”.

The deal will require regulatory approval and will likely be complete in the first half of 2022.

For Lumen, the deal will free up more funds to expand their networks in other key markets around the world, including France, Spain, and Switzerland, having made the decision that the Latin American unit did not align with their growth strategy.

But for Stonepeak, quite the opposite is true. The deal gives them “an extensive subsea, terrestrial fibre and data centre footprint” in Latin America, giving them a springboard from which to expand in the region.

In fact, Stonepeak has been on something of a global acquisition spree of late. Three years ago, the company acquired infrastructure firm euNetworks and, in November last year, acquired Astound Broadband, the sixth largest cable operator in the US, for $8.1 billion. 

Later, in 2021, the company was tied to a €12.6 billion bid for Dutch operator KPN, alongside rival equity firm EQT, though this offer was ultimately rejected.

“Lumen's Latin American business is a market leader with a strong footprint and exciting potential for expansion,” said Brian McMullen, Stonepeak Senior Managing Director. “Stonepeak has been an early and active investor in digital infrastructure globally and we are looking forward to applying our experience and additional capital to Lumen's Latin American business.”

 

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