Lumen Agrees $1.8B Sale of EMEA Business to Colt Technology Services

 The sale is expected to complete in late 2023

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Last Edited: November 3, 2022

James Stephen

Technology Journalist

Lumen Technologies has agreed to sell its EMEA business to Colt Technology Services for $1.8bn with an expected completion date of late 2023. 

The sale would strengthen Lumen’s financial position, adding value to its shareholders. The figure agreed represents an 11x multiple for the business’s estimated 2021 adjusted EBITDA. In return, Lumen would be required to hand over its terrestrial and subsea networks, network equipment, and data centres in EMEA. 

The transaction will remain subject to usual conditions including regulatory approvals in the U.S. and other countries where Colt operates, as well as indemnities and purchase price adjustments. 

Jeff Storey, Lumen President and CEO, said: “We are continuing to execute on portfolio optimization at Lumen, creating additional value for our shareholders by monetizing non-strategic assets at accretive multiples. 

“This transaction would enhance our focus so we can invest more efficiently in our most strategic opportunities – our key Enterprise and Quantum Fiber initiatives – and partner with regional leaders like Colt in Europe and Cirion in Latin America to continue serving our multinational enterprise customers.” 

“Lumen has a strong interest in Colt’s success, and we expect to remain a close business partner and key customer. 

“Colt’s strong reputation and customer focus make them the ideal partner to serve the needs of our customers, and we expect to remain Colt’s partner of choice for their customers’ needs in North America.” 

The potential sale is not only attractive because of its relatively high valuation compared with its 2021 EBITDA, it also represents new capital and a reduced portfolio with which to focus investments. 

Colt is also offering to enter into a strategic partnership, which would allow Lumen to keep many of its multinational customers. 

The global digital infrastructure business, Colt Technologies, which has over 60 offices worldwide will also stand to benefit from the acquisition of Lumen’s EMEA business in a number of ways. 

Colt will gain an expanded infrastructure in the EMEA regions, improving its services for global enterprises and strategic partners. Its extended network will enable Colt to offer European businesses expanded fibre connectivity. 

The company will be able to offer an increased range of product solutions for enterprise, hyperscaler, wholesale and government customers. 

Lumen’s terrestrial and subsea networks will allow Colt to meet enterprise and international IP traffic requirements in EMEA. 

Keri Gilder, CEO, Colt Technology Services, said: “This transaction would mark the next chapter in Colt’s exciting story of global growth and world-class innovation. 

“We’re deeply committed to building extraordinary connections for our people, customers and partners across our digital infrastructure. This acquisition would strengthen and extend these connections across existing and new geographies, helping us to accelerate growth and bring the power of the digital universe closer to our customers.” 

“Colt and Lumen share values, and a drive to deliver outstanding customer experience.

“This combination is powered by amazing people and incredible infrastructure and is inspired by technology’s ability to change the way we live and work.” 

The majority of Lumen’s EMEA employees are due to join Colt following the transaction. The subsequent partnership will enable Colt to serve EMEA-based customers which have service requirements outside of the region, as well as ensure Lumen can continue to support its own customers in EMEA. 

Morgan Stanley & Co. LLC is acting as Lumen’s financial advisor regarding the sale with Bryan Cave Leighton Paisner LLP providing legal advice to the company. Evercore Group LLC will be acting as Colt’s financial advisor with Baker & McKenzie LLP providing legal advice for the sale. 

Lumen has roughly 400,000 route fibre miles, serving more than 60 countries around the world. It delivers “the fastest, most secure platform for applications and data” for communities, businesses, and governments. 

Colt Technology Services, founded in 1992, operates its Colt IQ Network to connect 222 cities and 32 countries with over 31,000 buildings in Europe, 1000 data centres, and 51 Metropolitan Area Networks. 

Last month, Lumen announced the sale of its ILEC business to Brightspeed for $7.5bn. Similarly, Lumen believes the sale will provide new businesses and growth opportunities. 

In September, Lumen announced that its CEO, Jeff Storey, would be replaced by Kate Johnson, a former Microsoft executive. Johnson has a “track record of success” and she specialises in fuelling growth and leading companies through digital and business transformations. Storey will be succeeded on November 7th, 2022.

 

 

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