Lumen deal report points to AT&T ‘doubling down on convergence,’ says BofA

BofA analyst David Barden notes that both Reuters and Bloomberg reported yesterday that AT&T (T) is in talks to acquire Lumen’s (LUMN) consumer fiber operations for $5.5B, which implies an approximate 5.8-times adjusted EBITDA valuation, pre-synergies, assuming adjusted EBITDA is slightly less than $1.0B annually. Lumen’s mass market segment covers 16 mid-western and western states with virtually no state level overlap with AT&T and a potential combination offers upside to AT&T’s 50M fiber passings target, says the analyst, who views such a deal showing AT&T “doubling down on convergence.” The firm has a Buy rating and $28 price target on AT&T shares.