Lumen Selling ILECs in 20 States to Apollo Affiliates

Lumen agreed to sell its incumbent LEC business in 20 states to Apollo Global Management for $7.5 billion including debt assumption, the telco announced Tuesday. The carrier would retain its ILEC assets in 16 states, plus its national fiber routes and competitive LEC networks. See our earlier news bulletin about this transaction here.

The transaction is expected to be completed in the second half of 2022, "subject to customary closing conditions including required regulatory approvals," Lumen said. Apollo separately said it expects completion next year, without being more specific. The carrier is sticking by its expectations the transaction will be completed in the second half of next year, its spokesperson said. Apollo didn't comment right away about the difference between the two companies' expectations on when the deal will be wrapped up.

The deal needs OK from the FCC and DOJ. It will also need OK from nine states, a Lumen spokesperson said. The FCC declined to comment.

"Our investment will help accelerate the upgrade to fiber optic technologies," said Aaron Sobel, Apollo private equity partner. He said executives are "ready to bring faster and more reliable internet service to many rural markets traditionally underserved by broadband providers." Lumen is "pleased with the attractive valuation we received," said CEO Jeff Storey.

The investment company said NewCo will be led by industry veterans Bob Mudge, Chris Creager and Tom Maguire, who were “responsible for the buildout and growth of Verizon’s fiber-based Fios service.” Mudge joined Apollo in January 2020 as an adviser, according to his LinkedIn profile. Apollo didn't provide more complete biographies of the three executives.

The telco is selling assets passing 6.7 million "primarily copper-fed homes," New Street Research wrote investors. "This transaction establishes a value for copper lines of $1,119 / home passed."