This will allow Lumen to consolidate 12 legacy data warehouses into a single modern cloud-based platform and consolidate the number of user-facing IT owned systems from 170 to around 50. First, the company is updating its systems with new technology. Lumen is not only wanting to invest in growing markets, but it is taking steps internally to reduce costs. Lumen wants to position itself to meet the demands of the growing market segments it already has a presence in. The company also sees voice and VPN declining over this period. Within those spaces, Lumen sees Edge, which is a managed services network, and security being the two big growth spaces. Lumen believes the telecom categories it occupies are going to experience a cumulative 5% annual increase in growth between now and 2026, growing their markets from $115 to $135 billion. After analyzing the market, the company launched a plan to change the business towards meeting future needs. Finally, they initiated a debt exchange offer, which reduced debt by $630 million. Next, they enhanced productivity by reassigning work within their labor force. First, the company eliminated its dividend to preserve cash towards capital expenditures and investments in growth. With the new team in place, Lumen has already taken decisive action to facilitate its operational turnaround. Lumen’s management team is new and the company’s share price has been dogged by missed estimates, broken promises, and dividend cuts by prior management. The company provided some specific action steps it will be taking, along with financial guidance for the years 2023 through 2027. On Monday, Lumen presented a turnaround plan as part of its Investor Day. Lumen’s bonds maturing in 2039 continue to hover around 40 cents on the dollar, yielding 20% to maturity. The company’s debt offerings have also seen big price drops. Share prices have fallen more than 80% to $2.50 per share. Lumen Technology’s ( NYSE: LUMN) shares and bonds have been in distress over the past year.
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