Oct. 25 at 3:37 PM
$LUMN is already a good company, as evidenced by it's emerging role as THE cloud 2.0 company. Paying off the debt is not a strategic aim of the company, nor a desirable outcome. Retiring 1/4 of the debt with the AT&t deal and refinancing any remaining super priority 10%+ debt to market rates by the end of Q1 CY 2026 gets lumen to normalized debt ratios and will lower interest costs by nearly
$600M in fy2026. The AT&t divestiture also brings
$800M in reduced annual capex while only dropping
$2.X-300M in EBITDA from that business. That increases post-tax free cash flow by nearly
$1.1B/yr going forward. Add in another
$300M+ in cost out savings this year and
$1B reduction in annual operating costs by 2028, and we expect nearly
$2B annual improvement in annual FCF from 20255-2028. Bear case, realize half that free cash flow at a conservative 10x multiple, and assume post AT&t revenue flat from 2026-2028, and that comes to a
$10/sh increase over 3yr. Bull case
$20/sh+.
