Lumen Earnings: Glowing Business Commentary Accompanied by Typically Terrible Results

Lumen clearly saw some progress during the first quarter, mostly in its fiber broadband sales, but total revenue and EBITDA were awful, and the firm gave no way to judge comparable results for products that are core to its future versus those that we know are in perpetual decline. The firm completed a significant amount of debt restructuring during the quarter through a transaction services agreement, or TSA, with many of its creditors. The TSA pushes the next big maturity out until 2029 from 2027 and gives the firm another $2.3 billion in liquidity and relaxed debt covenants at the cost of higher interest rates. Lumen now has a much longer rope to turn around its business, but we’ve yet to see any meaningful signs of a turnaround. We’re maintaining our $1.50 fair value estimate.