Lumen Technologies announced it has secured $5 billion in new business driven by major demand for connectivity fueled by AI, alongside reporting its second-quarter 2024 financial results. Lumen said large companies across industry sectors are seeking to secure fiber capacity quickly, as this resource becomes increasingly valuable and potentially limited due to booming AI needs. Additionally, Lumen is in active discussions with customers to secure another $7 billion in sales opportunities to meet the increased demand.
To address this tremendous demand, which includes the recent announcement under which it will provide additional fiber capacity to Microsoft, Lumen disclosed plans to more than double its intercity network miles over the next five years, while also providing access to a significant amount of installed dark fiber. Lumen has secured an agreement with Corning to be its preferred partner for its next-generation fiber-dense cable, which will help accommodate the increased data processing that AI requires.
"The AI economy is changing business operations, and companies are recognizing they need powerful network infrastructure to manage the unprecedented data flows today and the demand in the future," said Kate Johnson, president and CEO, Lumen Technologies. "Our partners are turning to us because of our AI-ready infrastructure and expansive network. This is just the beginning of a significant opportunity for Lumen, one that will lead to one of the largest expansions of the internet ever."
Lumen has created a new Custom Networks division to manage its portfolio of Private Connectivity Fabric℠ solutions and address additional interest from hyperscalers and other large organizations. The division will provide customized network solutions that include dark fiber, custom fiber routes, and digital services that securely connect companies' data centers to protect data and support AI-intensive workloads. Lumen may also operate and maintain the network as part of its services.
In its Q2 2024 financial results, Lumen Technologies reported growth in North American large and mid-market enterprise sales, with a year-over-year increase in net total contract value across all channels. Improved customer satisfaction is expected to reduce churn and boost revenue growth. A notable partnership with Microsoft positions Lumen to capitalize on the increasing demand for high-bandwidth infrastructure supporting AI ventures.
Financially, Lumen reported a net loss of $49 million for Q2 2024, a significant improvement from the $8.736 billion loss in Q2 2023, which included a substantial non-cash goodwill impairment charge. The company’s adjusted EBITDA was $1.011 billion, down from $1.229 billion in the same period last year. Despite a negative free cash flow of $156 million, Lumen generated $511 million in net cash from operating activities. The updated full-year 2024 financial outlook projects adjusted EBITDA between $3.9 to $4.0 billion, with capital expenditures expected to range from $3.1 to $3.3 billion.
Key Metrics:
Net Loss: $(49) million, compared to $(8.736) billion in Q2 2023
Adjusted EBITDA: $1.011 billion, down from $1.229 billion in Q2 2023
Free Cash Flow: Negative $(156) million, compared to negative $(896) million in Q2 2023
Total Revenue: $3.268 billion, down from $3.661 billion in Q2 2023
Future Outlook:
Adjusted EBITDA: $3.9 to $4.0 billion
Free Cash Flow: $1.0 to $1.2 billion
Capital Expenditures: $3.1 to $3.3 billion
