Is Lumen in Trouble?

In a recurring theme, Lumen finds itself facing financial challenges. At the end of the third quarter of 2023, Lumen CEO Kate Johnson announced some restructuring with current debt holders to extend the due dates of some debt to ‘reduce the noise” around the company’s debt. The company is also eliminating staff to reduce expenses by $300 million annually. Lumen’s revenues dropped over 17 percent compared to 2022, but a large part of that drop comes from its spin-off of copper networks to Brightspeed for $7.5 billion and the sale of its Latin American business to Stonepeak for $2.7 billion. One of the interesting things to watch is how much Lumen will be able to invest in new infrastructure in 2024. In 2023, the company invested something in the range of $3 billion. One of the best ways for Lumen to continue to grow revenues and margins is by building more fiber to enterprises or residential customers. It’s clear that the company is financially distressed, but it still has a lot of solid customers and revenues. Lumen might squeak through the current troubles and be on solid ground again in a few years. Or we might see a sudden bankruptcy. Your guess is as good as mine.