A Spark in the Fiber That Could Power a Rebound

A high-risk telecom laggard is showing signs of life as new deals and restructuring efforts gain traction

Author

Noah Zelvis
August 31, 2025

Shares of this once-forgotten telecom Lumen (NYSE: LUMN) are down more than 10 percent this year and nearly 50 percent from last year’s highs.

Yet a fresh sports broadcasting deal, cost transformation efforts, and analyst upgrades suggest the next phase may finally bring momentum.

For investors comfortable with volatility, this dip could offer asymmetric upside.

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Strategic Positioning: From Legacy Decline to Network-as-a-Service

Lumen owns one of the largest fiber footprints in North America, with more than 350,000 route miles across business and consumer markets. Historically, the challenge has been turning this scale into profitable growth. Revenue has shrunk almost every year for the past half decade, leaving investors skeptical.

But the company is pivoting. The focus is shifting from commodity telecom services to Network-as-a-Service (NaaS), a model that lets enterprises instantly scale bandwidth and spin up connectivity on demand. This is higher-margin, more flexible, and directly aligned with modern digital infrastructure needs.

The recent Pac-12 Enterprises partnership is a showcase. Lumen’s NaaS is now powering live college football broadcasts, enabling producers to remotely scale bandwidth up to 10 gigabits for multi-event coverage. If replicated across sports, media, and content distribution, this could help Lumen reposition itself as more than a declining wireline operator.

Action Item: Speculative investors can begin building a starter position under $5, aiming for a tactical rebound into the $6–$7 range if execution improves.

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Recent Results: Weak Top Line but Margin Leverage

Q2 results underscored the duality. Revenue fell 5.4 percent year over year to $3.09 billion, missing consensus by a hair. Yet adjusted EPS of negative $0.03 beat estimates of negative $0.27, while adjusted EBITDA came in 5 percent above forecasts at $877 million.

Margins remain deeply challenged, with GAAP operating margin at negative 19.5 percent, but management raised optimism on EBITDA stabilization. Guidance calls for $3.3 billion of EBITDA for the year, slightly below Street expectations, but with free cash flow projected to reach $700–$900 million in 2025.

The big takeaway: revenues continue to decline, but cost discipline and selective wins are preventing a full collapse.

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Catalysts: Sports, Fiber, and Monetization

Citi’s recent upgrade to Buy highlighted four catalysts:

  • Productivity and Collaboration Factory (PCF) sales could drive incremental revenue.

  • Fiber monetization remains an option, unlocking hidden value.

  • Cost transformation is improving EBITDA leverage.

  • Core enterprise sales could stabilize with new offerings.

Add to that the Pac-12 broadcasting deal, which proves out the flexibility of Lumen’s NaaS model, and you have multiple levers that could re-rate the stock higher.

Valuation: Deep Discount With Optionality

At $5 per share, Lumen trades at a market cap of just $4.6 billion, with trailing twelve-month revenue over $12.8 billion. That’s a price-to-sales ratio of just 0.36x, well below peers. The balance sheet is strained but liquid, with a current ratio above 1.2 and no immediate solvency crisis.

Analyst targets range from $2 to $8, with Citi’s $6.50 base case implying nearly 30 percent upside. For long-term investors, the equity story hinges on whether Lumen can halt revenue erosion and turn its vast fiber assets into growth.

Action Item: Keep a strict risk budget. Position size small, and use $3.50 as a stop-loss level. If execution improves, a 40–50 percent rebound is plausible by 2026.

Risks: High and Unavoidable

  • Structural decline in legacy voice and consumer services drags overall revenue.

  • Competition from hyperscalers and cable operators remains fierce.

  • Execution risk in pivoting to NaaS is significant, with limited proof points so far.

  • Volatility is extreme: the stock has posted more than 40 moves over 5 percent in the past year.

Final Word: A Speculative Bet With a Defined Playbook

Lumen remains a turnaround story in progress. Its vast fiber assets and emerging NaaS offerings provide real potential, but execution risk is enormous. The Pac-12 deal shows what the company can deliver, but one contract is not a full strategy.

For aggressive investors, today’s low valuation provides optionality. For conservative portfolios, the risks likely outweigh the rewards.

Action Recap

✅ Starter positions under $5 for high-risk investors
✅ Watch Q3 for further NaaS wins and EBITDA margin stability
✅ Set a stop-loss near $3.50 to cap downside
✅ Upside targets $6–$7 near-term, with $8 on longer-term execution
✅ Only suitable as a speculative slice of a diversified portfolio

That's our coverage for today; thanks for reading! Reply to this email with feedback or any tech stocks you want me to check out.

Best Regards,
—Noah Zelvis
Tech Stock Insider