Lumen Technologies (LUMN) BofA Securities 2024 Media, Communications & Entertainment Conference summary

Strategic priorities and business focus

• Emphasis on maximizing organic growth and cost controls, targeting $35 million in SG&A savings and broader expense reductions globally.

• Shift in capital allocation toward developed markets, with reduced CapEx in emerging markets and a focus on Europe and the U.S.

• Targeting a leverage ratio of five times by year-end to maintain financial flexibility for M&A, buybacks, dividends, or CapEx.

• Board refreshment and governance improvements underway, including new board members.

Emerging vs. developed markets strategy

• Operational synergies and demand in emerging markets have been strong, but financial risks, especially FX and carrier consolidation, have outpaced expectations.

• Raised investment hurdle rates in emerging markets and plan to decrease overall exposure, repatriating cash to invest in developed markets.

• Pro forma for India, emerging markets will represent about 25% of AFFO per share, expected to decline further.

European market approach and M&A

• Entered Europe selectively, prioritizing favorable contract terms, CPI-linked escalators, and high demand.

• Building 500 new sites in Europe this year, with openness to further inorganic growth if terms and pricing are right.

• No current compelling M&A targets, but disciplined approach to portfolio expansion remains.