00:00 Spokesman a
Lumen Technologies sells its AT&T home home for five points $ 75 billion in cash. This is part of the company’s efforts to focus on its corporate strategy. For more information, we joined Lumen CEO Kate Johnson, who joined us and also join Morning Brad Smith’s short co-host. Kate, thank you very much for taking the time to talk to us this morning. So, hmm, selling this business to focus on your business business, talk to me through thinking about it and how it will allow you to do it.
00:55 Kate Johnson
Oh, thank you for participating in the show and I am glad to announce that it is a new day for Lumen. Thinking behind the deal was quite simple. Hmm, every company on Earth bends into AI. It has become a mission critical technology for any business that wants to transform, which wants to innovation that wants to compete and present in this environment. Hmm, and we have the right to win with assets to support those companies that I can talk about more about a minute. I think there was another trend that we looked at a lot, which is the convergence of the curves of demand for fiber and wireless in the consumer space. And AT&T has a scale, the brand, the print that really competes and invests in this business. So we chose to double where we have the right to win and sell the AT&T business from consumer fibers and, uh, and to maintain our ability to really serve the enterprise.
02:22 Brad Smith
Do you know that I was wondering in the conversations you had with the executives in AT&T, I had the opportunity to talk to Financial Officer Pascal Desroches in the past, uh, and in recent weeks, when I discussed their plans for fiber, where did it not go away and it became clear that it would make sense, not only AT&T
03:06 Kate Johnson
Well, I want to say, if you look at the deal, uh, Brad, it’s actually great for us. $ 5.75 billion when you make net revenues after the tax and add some money, we can, uh, reduce the debt by $ 4.8 billion and reduce the company from $ 4.9 to 3.9, and it’s just going to start. We reserve all assets from the copper side in the space of consumers, wholesale and the enterprise. They have meaningful, uh, cash flow and contribute significantly to our overall financial health. So we can continue to use these dollars to do whatever we want. We now have financial flexibility. We can pay off debt. We can continue to digitize and optimize our operations, or we can start, uh, think of acquiring new opportunities for servicing the enterprise.
04:25 Spokesman a
Hmm, Kate, talk to us a little about your business customers, if you can tell us who they are or what businesses are and what the opportunity for growth looks there.
04:46 Kate Johnson
Probably. A large enterprise from the commercial side, uh, you know, the middle markets, we serve the public sector, all of them, right? All of them in North America, multinational corporations. And our network is close to so many of them because it is huge and it comes close to touching them. They all share a common problem. AI is associated with huge data processing needs, right? And there is a great complexity in, uh, the network architecture of today. You have an advantage, you have data centers, you have multiple clouds and you need to serve the data in the most efficient place to make the calculation, which means you need a network that can support it. And inherited nets are not large enough, they are not fast, they are not safe enough and not intelligent enough. So we repair all this with our physical network and a digital layer on top to facilitate any enterprise, public sector or commercial, large or small, to use a network to use AI.
06:33 Brad Smith
Given all this, with the revenue from such a transaction, how you see some kind of building for a business that investors are really trying to envelop your mind in the last few years, as can be seen in some of the stock prices and know how much capital the front must be made in order to bring that scale.
07:08 Kate Johnson
We already have a digital platform where we provide a network as a service to these customers. This is a Telco cloud, so take the traditional transport mechanisms, whether it is IP or waves or ethernet. And now imagine to enable customers to fire every port with every service at any time and anywhere. This is a cloud consumption. This is the way they are used to thinking about these opportunities and we give it to them now. But we are also investing in data protection services and security services that we can put on this digital experience for them. So we have this incredible ability to scale the services we sell, scale revenue in corporate space and provide it with a cloud economy, which means that the marginal cost of servicing these customers continues to decrease. We are right in the initial submission of this, uh, a new phase of presenting the future of working on a network, but we have made incredible progress and the future is incredibly bright.
08:40 Brad Smith
How many of this network work do you think that it continues to remain in place and in some of these cloud data centers against what is sent through satellites in the sky, as we see that they are also priority on the other side of communications?
09:07 Kate Johnson
So I think every enterprise should have a complete strategy regarding how they will transport data. If they have remote places, you know, you can move from a fixed wireless connection to a satellite to 5G. And when they think about transportation, you know, data, data should find fiber as quickly as possible. So we are very comfortable with our role, no matter what these technologies on top and how they evolve, the data should find fiber as quickly as possible and have the best network of fibers.
10:02 Spokesman a
Kate, thank you again for taking the time. Brad, thank you too.