Lumen Technologies remains solidly behind both network-as-a-service (NaaS) opportunities to help drive revenues and in off-loading its consumer-focused fiber-to-the-home (FTTH) business that does not align with its financial or operational goals.

Lumen CEO Kate Johnson told investors during the company’s latest earnings call that its NaaS platform is gaining traction and disrupting the market. That disruption is in taking business from data center companies but also in helping to drive more business to Lumen’s cloud service provider partners.

That former disruption is based on Lumen being able to tie together its physical and virtual infrastructure in a package that makes it easier for enterprises to manage their data connectivity. The latter is in turning that easier management into more direct traffic-generating opportunities for hyperscalers like Amazon Web Services (AWS), Microsoft Azure, and Google Cloud Platform (GCP).

“And when I say higher, like it's an incredible rate,” Johnson teased of that interest. “I don't want to give it right now, but over the past 90 days, very, very significant growth. And what that suggests is that there's a faster path to revenue for the cloud companies, partnering with Lumen to provide networking for their end customers.”

Johnson previously noted that Lumen had signed up more than 400 NaaS customers, with customers moving quickly from testing a few ports to driving “additional service innovation.” That service innovation includes the ability to layer in security services, which Johnson said during an earnings call last year, “is an opportunity for us on the horizon to sell into every NaaS customer.”

Analysys Mason reported last year that traditional network operators like BT, Deutsche Telekom, Orange, Verizon, and AT&T are in prime position to capture one-third of the expected $8.7 billion investment enterprises are forecast to make in multicloud NaaS by 2028. The research predicts those operators will pocket 32% of that global enterprise spend on multicloud NaaS, which “offer platform-based NaaS having introduced sufficient automation and programmability in their IP networks.”

That opportunity is drawing considerable investments. This includes Lumen’s AI-focused upgrade push as well as a rash of networking acquisitions from the likes of Verizon and T-Mobile US.

Lumen focused on finances

Lumen could also be helping to fuel that networking acquisition frenzy. The vendor has talked openly about exiting its consumer-focused FTTH business, with rumors circulating of a multibillion deal with AT&T, which AT&T’s management has not dismissed.

“We've been very consistent in saying we're proud of the consumer fiber platform we've built, but the investment and return profile are not consistent with our desire to focus on the enterprise connectivity and services market,” CFO Chris Stansbury noted during the latest earnings call in regards to those rumors. “We have no news to report now, but we will update the market when it's appropriate to do so.”

Stansbury during an investor event earlier this year frankly explained that Lumen did not “have a right to win” in the consumer FTTH space.

“I don't think there's any disagreement that that market is moving to one of convergence where the sale of wireless, as well as fiber to the home in that bundle, allows a strategic buyer, if you will, to drive more enablements, more penetration, less churn, more stable pricing,” Stansbury said. “It's just an economic scenario that Lumen couldn't deliver without that wireless offering. And our footprint is really valuable.”

That value is a significant driver for Lumen.

Stansbury told that investor conference audience that a potential sale of its consumer fiber business would “fundamentally change the financial landscape for Lumen, because it would allow us to, at close, eliminate 25% of our debt. It would mean very little loss in EBITDA [earnings before interest, taxes, depreciation, and amortization] because our fiber business today is in investment mode to drive penetration. And it would mean that we walk away from a continued investment of a billion dollars a year in the consumer business.”

Stansbury during the earnings call noted that the vendor was able to refinance $2.4 billion in term loans that reduce its annual interest expense by around $55 million and pushes full payment of those loans from 2029 and 2030 out to 2032. Johnson also added that Lumen remains on track to squeeze $1 billion in cost reductions by the end of 2027.

Those cost-saving initiatives allowed Lumen to actually pay down some debt despite posting a drop in overall financial performance during the quarter. Lumen is also banking on new artificial intelligence (AI)-related growth opportunities.