- Lumen has now signed over $10B in PCF deals
- Neoclouds are now in the mix alongside hyperscalers, said CFO Chris Stansbury
- Lumen continues to go hard on NaaS, expanding to 10M locations
Lumen’s Private Connectivity Fabric (PCF) train keeps on rolling. The company in its third quarter earnings revealed it snagged another $1 billion in PCF contracts, bringing its total to over $10 billion
Most of Lumen’s PCF customers thus far have been hyperscalers. But it’s starting to get traction in the neocloud space, CFO Chris Stansbury told Fierce.
Neoclouds are a new breed of cloud providers that focus on offering GPU-as-a-service for AI applications. Think companies like CoreWeave, Lambda and Nebius, though Stansbury declined to share any customer names.
“I would simply say neocloud is now part of that mix,” he said.
Lumen is tapping into a market that’s poised to top $23 billion in revenues in 2025, according to Synergy Research Group. Despite industry concerns of a so-called AI bubble, the firm expects revenue to nearly octuple by 2030 and consolidation in the space to heat up.
We’ll have to wait and see if Lumen announces any big neocloud deals, but the company thus far is racking up hyperscaler and data center partnerships.
Lumen already supplies private connectivity for Amazon, Google Cloud, Meta and Microsoft, with Stansbury pointing out Lumen currently has about 15 PCF customers “that comprise that first nine [billion].”
Speaking on the Q3 earnings call, Lumen CEO Kate Johnson said the company expects its existing PCF contracts to generate a recurring revenue stream of $400-500 million by end of 2028.
Aiming to further its enterprise AI reach, Lumen in the quarter inked a multi-year partnership with Palantir, “where we not only agreed to buy services from each other, but we committed to bring those capabilities to joint customers,” Johnson added. Lumen will reportedly spend over $200 million on Palantir software over the next several years.
On the data center side, Lumen is also working with companies like DigitalRealty and QTS to boost their AI capacity.
Although total revenue of $3.09 billion slid 4% year-on-year – with the soon-to-be sold Mass Markets business dropping 8% to $631 million – Johnson believes Lumen is on the right track in moving away from its legacy telco roots.
“While we still carry the weight of declining legacy telecom revenue, our growing revenue base now comprises 50% of North American enterprise revenue, up from 35.5% just three years ago,” she said.
Lumen's all-in NaaS play
The PCF figure probably caught the most attention, but Lumen also emphasized it’s going hard on its Network-as-a-service (NaaS) platform.
The company now has over 1,500 Internet On-Demand customers and the service is available in over 10 million business locations.
Those 10 million consist of both on and off-net locations, which Stansbury said is a big deal because Lumen can market NaaS even to customers that have a different type of access connection, whether that's fiber, 5G, fixed wireless access and more.
Meaning a company can buy Lumen long-haul service while using another provider like AT&T or Verizon for their last-mile connection. Stansbury said Lumen’s new NaaS interface device, which will go to market next year, will let customers connect to the Lumen network and provision services “within five minutes.”
“It’s really disruptive because we don’t have a disadvantage for off-net structurally any longer,” he said.