S&P lowers Lumen Technologies

S&P said it lowered its ratings for Lumen Technologies Inc. to B+ from BB-, its senior unsecured debt to B from B+, and its senior secured debt to BB from BB+. The agency also cut the senior secured debt issued by Lumen subsidiary Level 3 Communications, Inc. to BB from BB+, its senior unsecured debt to B+ from BB- and subsidiary Qwest Corp.'s senior unsecured debt to BB from BB+ and the issue-level rating on Qwest Capital Funding Inc.'s senior unsecured debt to B+ from BB-.

“The rating downgrade reflects our expectation that EBITDA will decline sharply in 2023. Weak operating and financial results during the fourth quarter of 2022 were largely in line with expectations, and we expect the company's shift in strategy under new management with greater focus on the customer, simplification, and innovation to require investment to grow the business longer term. However, we believe it will take some time for this strategy to play out and will require solid execution,” S&P said in a statement.

The agency noted the company's EBITDA guidance for 2023 of $4.6 billion to $4.8 billion was about 10% below S&P’s previous base-case forecast. “Lumen's EBITDA outlook also represents a 15% decline from 2022, primarily because of topline pressures from secular industry declines as customers transition from legacy products to newer, less-expensive technologies.”

The outlook is negative.

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