Lumen(US:LUMN) Seeking Alphaยท2024-09-05 16:23Core Viewpoint - Lumen Technologies is focusing on its enterprise business and NaaS (Network as a Service) market, emphasizing the importance of fiber infrastructure and the potential for future growth despite current challenges in the legacy business [5][71][72]. Group 1: NaaS Market and Business Strategy - Lumen's NaaS market business currently generates approximately $1 billion in EBITDA, with a significant portion derived from fiber, which is expected to drive future growth [5][10]. - The company has a coverage of about 10 million homes, with 4 million enabled on the fiber side and 1 million customers currently using fiber services [8][9]. - Lumen is not pursuing consolidation in the consumer space but is focusing investments on the enterprise side, where it sees greater opportunities [6][7]. Group 2: Recent Developments and Contracts - Verizon's acquisition of Frontier for $20 billion has set a new benchmark for valuations in the industry, which Lumen is closely monitoring [4]. - Lumen recently announced over $5 billion in contracts, primarily related to construction and maintenance, with a significant portion of the revenue expected to come from these deals over the next few years [32][68]. - The contracts are structured to provide cash inflows before capital expenditures, allowing Lumen to manage its cash flow effectively [39][40]. Group 3: Financial Outlook and Growth Projections - The company anticipates a V-shaped recovery in EBITDA starting in 2026, following a decline in 2025 due to increased operational expenditures related to new projects [81][84]. - Lumen's revenue is expected to stabilize as declines in legacy business are offset by growth in IP, waves, and compute security services, with a potential crossover point in 2028 [85]. - The management team is confident in the company's ability to execute its strategy and capture market opportunities, particularly in the digital networking space [75][76].