LUMN · Lumen Technologies, Inc.

Lumen Technologies finalized the divestiture of its Mass Markets fiber-to-the-home business across 11 states to an AT&T subsidiary on February 2, 2026, generating $5.72 billion in pre-tax cash proceeds after adjustments from the $5.75 billion headline figure. This transaction, initially announced via a Purchase Agreement on May 21, 2025, marks a strategic exit from consumer FTTH operations in those territories, with the Disposal Group classified as held for sale since that date. The proceeds were promptly deployed to fully redeem high-interest secured notes totaling undisclosed principal across three series (10% due 2032, 4.125% due 2030 and 2029) and repay the superpriority term B credit facility, materially deleveraging the balance sheet. Pro forma balance sheet as of December 31, 2025 reflects this with cash equivalents rising to $1.958 billion from $1.003 billion historical, long-term debt dropping to $12.639 billion from $17.353 billion (after $4.714 billion removal), and total assets at $31.026 billion. The pro forma income statement for 2025 illustrates the divestiture impact: operating revenue declines to $11.679 billion after removing $802 million FTTH revenue offset by $79 million from new AT&T commercial agreements, yielding a deeper operating loss of $1.143 billion. Net loss widens to $1.943 billion or ($1.95) diluted EPS, incorporating historical $740 million early debt retirement losses and $628 million goodwill impairment. New agreements include a Transition Services Agreement generating ~$60 million initial-year fees, reciprocal Master Services Agreements adding $50 million revenue/$18 million expense, and a 20-year Indefeasible Right to Use fiber access, with $496 million deferred revenue allocation. These recurring arrangements mitigate some revenue loss but introduce ongoing dependencies. Pro forma figures exclude post-divestiture dis-synergies and separation costs per SEC rules, with final accounting pending in Q1 2026 10-Q. Investors benefit from enhanced liquidity and reduced debt burden, though earnings pressure persists from legacy operations.