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AT&T's Lumen Deal Hides an Opportunity Most Investors Are Missing
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The Motley Fool
The deal, which is expected to close early this year, will add 4 million passed locations and 1 million subscribers to AT&T's growing fiber network.
The opportunity makes the price worth payingWhile near-term financial results will come under some pressure from the Lumen deal, AT&T has outlined a significant opportunity to boost fiber revenues.
The Lumen fiber network being acquired has a 25% customer penetration rate, meaning that just 25% of locations passed by the network are paying subscribers.
AT&T's convergence rate, or the percentage of fiber customers who are also wireless customers, is currently 42%.
With the Lumen deal, AT&T is taking its winning strategy of cross-selling fiber and wireless services and applying it to an underpenetrated fiber network.