Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. You're listening to Bloomberg
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Speaker 1: It is time for another edition of the CFO of Briefing.
Speaker 1: This week we are joined by Chris Stansbury, chief financial
Speaker 1: Officer and EVP of the Louisiana based publicly traded global
Speaker 1: communication services company Loomen Technologies, marketcap of about six point
Speaker 1: eight billion dollars shares so far this year, up more
Speaker 1: than twenty five percent. Also with us here in the
Speaker 1: studio is Nina Trentman, Bloomberg News Senior Editor. She writes
Speaker 1: the CFO Briefing newsletter. You can subscribe to it at
Speaker 1: Bloomberg dot com slash CFO Dash Briefing. Chris is featured
Speaker 1: in the most recent edition of the newsletter. Chris joins
Speaker 1: us from Denver. Chris, welcome the company divesting non core assets.
Speaker 1: For example, earlier this year announcing the sale of its
Speaker 1: mass market residential fiber unit to AT and T for
Speaker 1: five point seventy five billion dollars in cash. Now, what
Speaker 1: you're planning to do is leasing existing fiber routes to
Speaker 1: hyper scalers and social media companies to transport AI traffic
Speaker 1: between data centers. I want to know how big of
Speaker 1: an opportunity is it to lease to these hyperscalers.
Speaker 2: Yeah, thanks for having me today. It's been quite a
Speaker 2: journey at Luhman over the last three and a half years.
Speaker 2: And really what we see as an opportunity and have
Speaker 2: seen really through our transformation is the AI multi cloud
Speaker 2: world that's being developed right now. The network of yesterday
Speaker 2: wasn't built to support it. And if you really think
Speaker 2: about the economics of AI and the economics of a GPU,
Speaker 2: you want to keep that GPU fed as much as
Speaker 2: it can consume so that they're spinning constantly, and that's
Speaker 2: where you get the economic benefit. So the problem with
Speaker 2: the network that has existed so far is that as
Speaker 2: those data get spread further and further away, as data
Speaker 2: centers are in search of power and cooler temperatures, there's
Speaker 2: latency problems and there's access problems. It takes a long
Speaker 2: time for networking to adjust. So what we're doing is
Speaker 2: building a mesh that basically goes anywhere to anywhere where
Speaker 2: the customer on demand can move those workloads where they
Speaker 2: need them in super low latency manner. So that's the
Speaker 2: big change, and so it's not just hyperscalers, it's really
Speaker 2: the full connectivity between the hyper scalers running those clouds,
Speaker 2: the hyperscalers obviously building those AI algorithms, and large enterprise
Speaker 2: customers who are on the AI journey now and we'll
Speaker 2: be using it much more heavily in the future.
Speaker 3: Chris, thanks for joining us again. It's great to chat.
Speaker 3: Just wondering with the AT and T deal and also
Speaker 3: what you've been done in capital markets in recent weeks.
Speaker 3: You've really improved your financing structure. You're saved one hundreds
Speaker 3: of millions in interest expenses a year. Talk to us
Speaker 3: a little bit about that.
Speaker 2: Yeah, if you go back in time when we all
Speaker 2: joined Lumen and saw this opportunity, the balance sheet was
Speaker 2: not our friend. We had a lot of debt. Half
Speaker 2: that debt was due in one year. It was due
Speaker 2: in twenty twenty seven, and that was job number one.
Speaker 2: We really needed to strengthen the foundation of the company
Speaker 2: so that we could go do the things that we're
Speaker 2: executing against today. So that was really accomplished through a
Speaker 2: couple of things. One is we did the largest out
Speaker 2: of court debt restructuring in history that's not quite two
Speaker 2: years ago, and that allowed us to push those maturities
Speaker 2: out a bit, but at a significant expense. Our annualized
Speaker 2: interest expense at that point was about one point four
Speaker 2: billion dollars. But from there we saw in the middle
Speaker 2: of those negotiations, we saw this opportunity with the hyperscalers,
Speaker 2: and soon after that that debt negotiation was completed, we
Speaker 2: signed eight billion dollars worth of deals and that has
Speaker 2: grown since. That allowed us to monetize an asset that
Speaker 2: has been in the ground for twenty five years, which
Speaker 2: is conduit that we can blow fiber through to meet
Speaker 2: the needs of the hyperscalers in a fairly short period
Speaker 2: of time versus building new and that's really the core
Speaker 2: enduring advantage of this business. And then we layer the
Speaker 2: digital on top of that. But the cash from those
Speaker 2: deals allowed us to refinance and delever, so we've made
Speaker 2: a number of moves so far this year, and with
Speaker 2: the sale of the consumer fiber business to AT and
Speaker 2: T when that closes, our debt will be down to
Speaker 2: just over thirteen billion dollars in Our interest expense on
Speaker 2: an annualized basis will be about seven hundred million, so
Speaker 2: in a two year period, dramatically reshaping both the quantum
Speaker 2: of debt as well as the maturity curve. And now
Speaker 2: that balance sheet is a real asset for US as
Speaker 2: we invest in the AI multi cloud world.
Speaker 3: Yeah, IM actually wondering about the investments. Of course, there's
Speaker 3: a lot of campex that's required in a business like yours.
Speaker 3: We've seen earlier this year the One Big Beautiful Bill
Speaker 3: Act that was passed, which tries to encourage investment, including
Speaker 3: in capital investments, by allowing USCFO to depreciate certain investments faster,
Speaker 3: Like do you think this will make an impact as
Speaker 3: you're thinking about future investments in your business here in
Speaker 3: the US.
Speaker 2: Definitely. If you go back to the twenty seventeen legislation
Speaker 2: that the big problem with that legislation is is it
Speaker 2: created an unequal playing field between say, more service oriented
Speaker 2: or asset light companies and asset heavier infrastructure companies. And
Speaker 2: if you look at where the administration is focused today,
Speaker 2: it's clearly around infrastructure. I think the US has the
Speaker 2: biggest challenges really is making sure that we don't get
Speaker 2: too far behind with our infrastructure. So the recent legislation
Speaker 2: has leveled that playing field, and really that was around
Speaker 2: two things. The first is is that there was interest
Speaker 2: deductibility limits that used to exist that have been relaxed
Speaker 2: dramatically because again, asset heavy infrastructure companies tend to have
Speaker 2: higher leverage. And then to your point, the ability to
Speaker 2: accelerate depreciation to help on the tax side is significant.
Speaker 2: That reduces the risk that companies that are investing in
Speaker 2: infrastructure take on when they make those kinds of investments.
Speaker 2: So it's absolutely an opportunity for us.
Speaker 1: Chris cann have to leave it there, but you've got
Speaker 1: to come back and join us once again. And I
Speaker 1: do remind everybody that Chris is featured in the most
Speaker 1: recent edition of the CFO Briefing newsletter. You can sign
Speaker 1: up for it at Bloomberg dot com slash CFO Dash Briefing.
Speaker 1: We've been speaking with Chris Stansbury, CFO and EVP of
Speaker 1: Luminant Technologies also joining us here in the studio. Nina Trentman,
Speaker 1: Bloomberg News Senior Editor. Sign up for that CFO Briefing newsletter.