Wells Fargo says the selloff in shares of Lumen (LUMN) after Bloomberg reported AT&T (T) is in advanced talks to acquire the company’s Quantum Fiber business for at least $5.5B “seems overdone.” The reported deal would be both accretive to Lumen’s free cash flow and deleveraging, the analyst tells investors in a research note. Wells views the potential deal as “more mixed” for AT&T, not it would be free cash flow dilutive, but expands the company’s addressable market for fiber to greater than 55M subscribers. The headline numbers relatively in-line with Wells Fargo’s $6B estimate for Lumen’s fiber carve-out, the firm notes. It keeps an Equal Weight rating on Lumen with a $5 price target.
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