Lumos strikes $1.1B financing deal to fuel fiber expansion

Lumos has inked a $1.1 billion sustainability-linked infrastructure financing deal, which the company said will help fund long-term fiber rollout plans.

This transaction is unique in that it’s the first U.S. fiber-to-the-home financing deal that’s structured similarly to European FTTH transactions, according to a Lumos rep. Private equity firm EQT signed the agreement with a group of underwriters, which are all international commercial banks.

Specifically, the deal consists of a fully funded loan, an additional “capex facility,” which can be drawn to fund upcoming needs for Lumos (e.g., new fiber projects) as well as a “revolving credit facility for ongoing business needs.”

“While other U.S. FTTH businesses have used loan structures, bond structures, or securitizations in the past, this is the first infrastructure financing in U.S. FTTH which includes a loan and an initially undrawn capex facility to fund future projects,” the Lumos rep told Fierce.

Interestingly, the Lumos deal is also the first U.S.-based sustainability-linked fiber financing agreement. Meaning it includes mechanisms “by which interest costs / margins will be linked to the achievement of long-term goals for 3 ESG KPIs which are most relevant to Lumos's business model,” said the spokesperson.

The rep added Lumos plans to release its first annual sustainability report in the coming days, following the path several major ISPs have taken in reporting their environmental impact. Telcos play a key role in curbing climate change and carbon emission levels, as Optera Co-Founder and CEO Tim Weiss recently told Fierce.

The Lumos spokesperson said the $1.1 billion will support Lumos’ goal to deliver broadband to 1 million new households in underserved markets across the Mid-Atlantic and southeastern U.S.

CEO Brian Stading told Fierce in April Lumos is looking to reach more than 110,000 new fiber passings in 2023, targeting locations in North Carolina, South Carolina and Virginia.

Frontier Communications is another operator that’s using financing to fuel fiber deployments. It just closed a $2.1 billion fiber securitization offering covering 600,000 locations in Frontier’s Dallas market.