Lumen(LUMN)2023-03-06 23:23Summary of Lumen Technologies, Inc. Conference Call Company Overview - Company: Lumen Technologies, Inc. (NYSE:LUMN) - Date: March 6, 2023 - Participants: Chris Stansbury (CFO), Simon Flannery (Morgan Stanley) Key Points Company Changes and Strategy - Lumen divested two major businesses: the 20 state ILEC business to Apollo and the LATAM business, creating Brightspeed and Cirion respectively [2][3] - The divestitures led to a reevaluation of capital allocation priorities, resulting in the elimination of dividends and a focus on growth [2][3] - The company aims to achieve revenue and EBITDA stability by the end of 2024, with a growth mindset shift [3][7] Network and Product Opportunities - Lumen possesses the largest ultra-low loss fiber network globally, with plans to double its footprint [5] - The company recognizes the need to monetize its network effectively, especially in a commoditized market [6] - There is a focus on expanding offerings beyond connectivity, including security and edge computing solutions [6] Internal Focus and Resource Allocation - The "grow, nurture, harvest" strategy was introduced to improve visibility and resource allocation within the company [9][10] - This strategy aims to prioritize growth products over legacy products, ensuring resources are allocated effectively [10][12] Financial Guidance and Investments - Lumen plans to invest 500 million allocated to CapEx and $200 million to OpEx [17][19] - The company is focused on digitizing its sales process and simplifying IT systems to unlock costs [17][18] - Guidance indicates a push for leverage reduction, with proceeds from divestitures aimed at deleveraging [25][55] Market Dynamics and Competitive Landscape - The enterprise market is experiencing slow approval cycles, with no significant changes expected in the near term [31] - Lumen is positioned to capitalize on hybrid work environments, providing connectivity and security solutions [31] - The company is also exploring partnerships with cloud companies to enhance its edge computing capabilities [34] Fiber Build and Market Penetration - Lumen's Quantum Fiber product has shown promising penetration rates, with a focus on thoughtful investment in fiber builds [46][47] - The company aims to pass 5 to 7 million homes, with a current target of 0.5 million homes for the year [51][52] Supply Chain and Inflation Challenges - Supply chain issues and inflationary pressures are expected to persist in the near term, although inventory levels are being managed [61][62] Additional Insights - The company is shifting its operational structure to enhance focus on consumer and enterprise segments [48] - There is an emphasis on customer lifetime value and transitioning customers from legacy services to newer offerings [40] - Lumen is committed to maintaining positive cash flow while navigating its investment cycle [57] This summary encapsulates the key insights and strategic directions discussed during the conference call, highlighting Lumen's focus on growth, operational efficiency, and market opportunities.