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Is Momentum in NaaS and PCF Strengthening Lumen's Growth Prospects?
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Key Takeaways
Lumen's PCF deals reached nearly $13B, beating its $12B target and strengthening its AI network position.
LUMN plans to expand fiber network to 58M miles by 2031 with new PCF deals and 400-gig route investments.
NaaS customers rose 29% Y/Y, with over 2,000 businesses adopting on-demand networking for AI workloads.
Lumen Technologies’ (LUMN - Free Report) Network-as-a-Service (NaaS) and Private Connectivity Fabric (PCF) solutions are shaping its growth trajectory in the AI-driven digital economy. PCF is Lumen’s high-capacity, low-latency fiber network acting as the physical backbone of the AI economy, ensuring high-speed data movement across distributed environments. It delivered strong PCF sales in the fourth quarter, with total deals reaching nearly $13 billion, surpassing its earlier $12 billion target, and more deals in the pipeline. These deals strengthen Lumen’s finances, fund growth and cement its position in the multi-cloud AI market.
Lumen reached its 2025 goal of 17 million intercity fiber miles, and $2.5 billion in new fourth-quarter PCF deals will expand its network to 58 million fiber miles by 2031, boosting enterprise capacity. To achieve this, it is investing in building 400-gig rapid route waves across 36 routes, providing 400-gig services for data centers and focusing on metro expansion. The company expects an incremental revenue of $900 million to $1.1 billion from digital and PCF initiatives by 2028.
NaaS is emerging as another key growth driver, with customer numbers increasing 29% year over year. The rising number of ports per customer indicates growing enterprise adoption of Lumen Fabric for Cloud 2.0, with each additional port improving margins, cloud and AI adoption, and ecosystem growth. By February 2026, the NaaS customer base has doubled to more than 2,000 businesses since the third quarter of 2025, highlighting the rapid shift by enterprises toward on-demand, programmable networking to support AI and cloud workloads. NaaS Internet On-Demand Off-Net launch is expanding its market opportunity, with more than 900 off-net ports already sold. Investments in programmable networks are driving high-value digital revenue growth and are expected to enhance investor returns.
LUMN vs. Competitors: How it Stacks Up
Verizon (VZ - Free Report) is gaining momentum in robust 5G adoption and fixed wireless broadband. It plans to accelerate the availability of its 5G Ultra Wideband network while focusing on higher-tier premium mobility and broadband offerings. In the enterprise and wholesale business, Verizon is changing its revenue mix toward newer growth services like cloud, security and professional services. The company has introduced Complete Business Bundle solutions. With reliable, plug-and-play Internet connectivity, desk phones and security solutions backed by 24/7 tech support, these solutions enable the digital transformation of small business entities. Its 5G strategy is driven by spectrum depth, extensive fiber infrastructure and widespread small-cell deployment.
Cogent Communications (CCOI - Free Report) excels in selling larger 100-gigabit and 400-gigabit connections in select locations, resulting in a shift in its connection mix and significantly lowering its average price per megabit. By using Internet routers without additional legacy equipment, Cogent incurs relatively lower costs compared to its competitors. Its efficient network expansion and integration execution ensure high-quality Internet service, leveraging its highly economical metro and intercity network infrastructure. Operating as one of the most interconnected Tier 1 networks in the world, Cogent provides efficient on-network and off-network connectivity solutions to various Enterprise segments, including financial companies, educational institutions and law firms at affordable costs.
Valuation-wise, LUMN seems attractive, as suggested by the Value Score of A. Regarding the forward 12-month price/sales ratio, LUMN is trading at 0.62, lower than the industry’s multiple of 1.65.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for LUMN’s earnings for fiscal 2026 has been revised upward significantly over the past 60 days.
View the Zacks #1 Rank List
Image: Bigstock
Is Momentum in NaaS and PCF Strengthening Lumen's Growth Prospects?
Key Takeaways
Lumen Technologies’ (LUMN - Free Report) Network-as-a-Service (NaaS) and Private Connectivity Fabric (PCF) solutions are shaping its growth trajectory in the AI-driven digital economy. PCF is Lumen’s high-capacity, low-latency fiber network acting as the physical backbone of the AI economy, ensuring high-speed data movement across distributed environments. It delivered strong PCF sales in the fourth quarter, with total deals reaching nearly $13 billion, surpassing its earlier $12 billion target, and more deals in the pipeline. These deals strengthen Lumen’s finances, fund growth and cement its position in the multi-cloud AI market.
Lumen reached its 2025 goal of 17 million intercity fiber miles, and $2.5 billion in new fourth-quarter PCF deals will expand its network to 58 million fiber miles by 2031, boosting enterprise capacity. To achieve this, it is investing in building 400-gig rapid route waves across 36 routes, providing 400-gig services for data centers and focusing on metro expansion. The company expects an incremental revenue of $900 million to $1.1 billion from digital and PCF initiatives by 2028.
NaaS is emerging as another key growth driver, with customer numbers increasing 29% year over year. The rising number of ports per customer indicates growing enterprise adoption of Lumen Fabric for Cloud 2.0, with each additional port improving margins, cloud and AI adoption, and ecosystem growth. By February 2026, the NaaS customer base has doubled to more than 2,000 businesses since the third quarter of 2025, highlighting the rapid shift by enterprises toward on-demand, programmable networking to support AI and cloud workloads. NaaS Internet On-Demand Off-Net launch is expanding its market opportunity, with more than 900 off-net ports already sold. Investments in programmable networks are driving high-value digital revenue growth and are expected to enhance investor returns.
LUMN vs. Competitors: How it Stacks Up
Verizon (VZ - Free Report) is gaining momentum in robust 5G adoption and fixed wireless broadband. It plans to accelerate the availability of its 5G Ultra Wideband network while focusing on higher-tier premium mobility and broadband offerings. In the enterprise and wholesale business, Verizon is changing its revenue mix toward newer growth services like cloud, security and professional services. The company has introduced Complete Business Bundle solutions. With reliable, plug-and-play Internet connectivity, desk phones and security solutions backed by 24/7 tech support, these solutions enable the digital transformation of small business entities. Its 5G strategy is driven by spectrum depth, extensive fiber infrastructure and widespread small-cell deployment.
Cogent Communications (CCOI - Free Report) excels in selling larger 100-gigabit and 400-gigabit connections in select locations, resulting in a shift in its connection mix and significantly lowering its average price per megabit. By using Internet routers without additional legacy equipment, Cogent incurs relatively lower costs compared to its competitors. Its efficient network expansion and integration execution ensure high-quality Internet service, leveraging its highly economical metro and intercity network infrastructure. Operating as one of the most interconnected Tier 1 networks in the world, Cogent provides efficient on-network and off-network connectivity solutions to various Enterprise segments, including financial companies, educational institutions and law firms at affordable costs.
LUMN Price Performance, Valuation and Estimates
Shares of LUMN have gained 14.7% in the past six months compared with the Diversified Communications Services industry’s rise of 1.4%.
Image Source: Zacks Investment Research
Valuation-wise, LUMN seems attractive, as suggested by the Value Score of A. Regarding the forward 12-month price/sales ratio, LUMN is trading at 0.62, lower than the industry’s multiple of 1.65.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for LUMN’s earnings for fiscal 2026 has been revised upward significantly over the past 60 days.
Image Source: Zacks Investment Research
LUMN currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.