Lumen Banks $1.5 Billion Copper Exit as Alkira Lifts Strategic Revenue

Lumen Technologies will accelerate copper decommissioning in Iowa, Florida, Nevada and Utah, expecting the moves to generate up to $1.5 billion in pre-tax net copper recovery proceeds over five years — roughly $300 million per year — as it pushes customers toward network-as-a-service and cloud networking products built around the recently acquired Alkira.

The announcement came alongside third-quarter results showing total revenue down 12% year-on-year to $2.72 billion. The decline tells only part of the story. Strategic revenues, which combine NaaS and cloud networking services including Alkira, grew 10% in the quarter to $1.28 billion — now approaching half of total company revenue.

What is growing beneath a shrinking top line?

NaaS adoption metrics moved sharply upward during the quarter. Lumen's total NaaS customer base exceeded 4,000, with active clients up 24% quarter-over-quarter. Active ports rose 38% and active services jumped 35% over the same period.

Those adoption figures will be the last ones investors see for a while. Lumen said it will stop sharing NaaS adoption metrics going forward and will instead concentrate on financial performance, folding the business unit into its digital revenue and growth reporting. The company did not explain what prompted the change in disclosure practice — a point worth watching as the strategic segment takes on more of the burden of proving the turnaround.

Can Alkira offset the copper wind-down?

Since closing the Alkira acquisition, Lumen has signed private medical insurer VUMI Group as a customer. The insurer reportedly saw its global network simplified through Alkira's cloud-native control plane — the first named enterprise win for the asset.

CFO Chris Stansbury positioned Alkira as the high-growth engine offsetting what he called the accelerated decline of the legacy copper business. On margins, he pushed back directly on the assumption that legacy revenue is the more profitable part of the portfolio.

"Many incorrectly believe that legacy revenue carries higher margin than strategic," Stansbury said on the earnings call. "Year-to-date, the average direct margin across our strategic portfolio is over 80% compared to approximately 65% for legacy. Strategic portfolio margins are meaningfully higher than legacy."

The gap is substantial: a 15-percentage-point margin advantage on a portfolio approaching $5 billion annualized means strategic business earns materially more per revenue dollar than the copper plant it is replacing.

Why mine the copper rather than run it?

CEO Kate Johnson framed the decommissioning in unusually blunt terms, presenting the physical copper network as an asset best monetized through recovery rather than operation.

"Copper is worth more to us mined than operated," Johnson said while outlining the firm's cloud-strong pivot. "We're no longer dependent on selling the next physical link in order to grow. We make money by moving data from anywhere to anywhere."

The four-state acceleration builds on an existing wind-down program, and the up-to-$1.5 billion proceeds figure depends on scrap metal values and decommissioning costs that Lumen did not detail. The caveat sits in the phrase "up to": the company offered no floor for the recovery proceeds and no state-by-state breakdown of expected gains.

The strategic bet is now measurable in both directions: a 10% growth rate and 80%-plus margins on one side, a 12% revenue decline on the other. Whether Alkira and NaaS can keep expanding fast enough to close that gap will become visible in the coming quarters — though, with NaaS adoption metrics withdrawn, investors will have to judge it on dollars alone.