Feb 3 (Reuters) – Lumen Technologies forecast annual free cash flow exceeding Wall Street estimates on Tuesday, after posting a surprise adjusted profit in the fourth quarter, driven by strong demand for its connectivity solutions.
The company has been working towards growing its digital fiber connectivity solutions while managing the challenges associated with its legacy business, which includes traditional telecom services such as voice, broadband and ethernet services.
“As we move to the future, we’re seeing a lot more uptake in our digital products, which really allow customers to consume, networking, on the same plane, of storage and compute,” CFO Chris Stansbury told Reuters in an interview.
In the fourth quarter, Lumen signed roughly $2.5 billion in deals for its private connectivity fabric solutions, Stansbury added.
Lumen, which sold its consumer fiber operations for $5.75 billion in cash to AT&T, “is not in borrowing mode anymore” to run the business, the finance chief said. “We will have excess cash flow.”
The deal helped Lumen reduce debt by over $4.8 billion, with its leverage now below four times.
The company sees annual free cash flow between $1.2 billion and $1.4 billion, compared with analysts’ average estimate of $515.7 million, according to data compiled by LSEG.
For the fourth quarter ended December 31, Lumen posted adjusted earnings per share of 23 cents, while analysts expected a loss of 27 cents per share.
Lumen reported revenue of $3.04 billion for the quarter, in line with expectations.
(Reporting by Juby Babu in Mexico City; Editing by Krishna Chandra Eluri)
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