Lumen Technologies (LUMN) TD Cowen's 54th Annual Technology, Media & Telecom Conference summary

Strategic priorities and business transformation

• Focused on inflecting EBITDA in 2024, with revenue inflection targeted for 2028, potentially accelerated by the Alkira acquisition.

• Alkira acquisition enables programmable, software-driven networking, positioning for AI-driven enterprise needs and east-west data traffic.

• Emphasis on digital revenue growth, with a $500–$600 million target and expectations of a J-curve adoption similar to cloud services.

• Cost savings initiatives aim for $700 million by year-end and $1 billion by 2027, driven by system unification and legacy product retirement.

• Copper decommissioning and digital product migration are integral to long-term efficiency and margin improvement.

Technology and market positioning

• Programmable network and Multi-Cloud Gateway will allow dynamic, global data orchestration without additional fiber investment.

• East-west traffic and AI inference phase are seen as major growth drivers, with enterprise focus differentiating from competitors.

• Edge computing and low-latency connectivity are critical for AI applications, with network proximity to 95% of U.S. businesses under five milliseconds.

• NaaS pricing will mirror cloud models, offering flexible, volume-based discounts and on-demand capacity scaling.

• No direct pure-play competitor combines owned network and software orchestration at all network layers.

Financial outlook and capital structure

• EBITDA inflection expected in 2024, with more significant growth in 2025 and beyond as digital products scale.

• Free cash flow projected at $500 million and EBITDA at $3.6 billion by 2029, with leverage targeted at 3.25x.

• Debt reduced from $20 billion to under $13 billion, with a simplified capital structure and normalized maturity curve.

• Input cost pressures are managed through customer pass-throughs and focus remains on revenue growth.

• Outsourced labor partnerships support network buildout and operational efficiency.