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Can Lumen's Expanding NaaS Business Drive Top-Line Growth?
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Key Takeaways
Lumen is seeing strong NaaS momentum as enterprises adopt on-demand connectivity for AI and multi-cloud needs.
LUMN reported 25% sequential growth in NaaS customers, with rising ports, services and enterprise wins
Lumen expects digital revenues, including NaaS, to add up to $900M by 2030 as outlined at Investor Day 2026.
Lumen Technologies (LUMN - Free Report) is seeing strong momentum in its Network-as-a-Service (NaaS) business as enterprises shift to on-demand connectivity to support AI and multi-cloud workloads. While the company continues to face pressure from legacy revenue headwinds, management is increasingly positioning NaaS and broader digital services as key top-line drivers.
In the first quarter of 2026, NaaS active customers were up 25% sequentially. Active ports rose 35% sequentially, while services sold across ports increased 32% from the prior quarter. The company witnessed strength in off-net and large enterprise wins.
Lumen now has 2,500 NaaS customers, with more than 30% repeat purchasers. Notably, more than 20% of new NaaS adopters in the quarter were entirely new to Lumen, suggesting it is gaining incremental market share with this platform.
Lumen Technologies, Inc. Price, Consensus and EPS Surprise
Management further added that, among the existing customers, more than 60% of first-time adopters expanded their footprint rather than simply migrating legacy services.
Upselling trends further reinforce demand strength. Lumen added that about 25% of NaaS customers are attaching multiple services per port, particularly in security offerings like DDoS protection. This points to rising wallet share and customer engagement.
Financially, the NaaS opportunity is meaningful but gradual. Digital revenues were $37 million, while other strategic revenues were $1,131 million in the first quarter. At its Investor Day, LUMN noted digital capabilities, including NaaS, Edge Solutions, Security and the Connected Ecosystem, are expected to deliver between $500 million and $600 million of incremental revenues exiting 2028 and $800-$900 million by 2030.
Lumen’s expanding NaaS business is emerging as a key driver of top-line growth. But the impact will likely be gradual as the company works through legacy headwinds and scales its digital platform.
Taking a Look at Growth Drivers for Rivals
Cogent Communications (CCOI - Free Report) is a Tier 1 Internet Service Provider offering low-cost, high-speed Internet access, private network services and colocation services with ultra-low-latency data transmission. The company continues to shift its revenue mix toward higher-margin segments. Total on-net revenues (including on-net wave) in the first quarter of 2026 improved 9.1% year over year and 1.9% sequentially to $149.2 million.
Cogent Communications is benefiting from increasing customer engagement in its net-centric business, with revenues increasing 14.2% year over year and 2.3% sequentially. Surge in video traffic, AI proliferation, streaming, IPv4 leasing and wavelength sales remain primary growth drivers. However, continued weakness in legacy Sprint and off-net revenues offset gains in on-net and wavelength services.
AT&T (T - Free Report) is one of the largest wireless service providers in North America. The company continues to witness 5G and fiber subscriber growth. AT&T’s first-quarter narrative was shaped by its newer segment reporting structure, which centers on Advanced Connectivity, Legacy and Latin America.
The Advanced Connectivity segment delivered operating revenues of $28.47 billion, up 4.7% year over year, as service revenues increased 3.6% to $22.9 billion and equipment revenues improved 9.3% to $5.61 billion. However, the Legacy segment remained a drag as customers continue to migrate away from copper-based voice and data services. Legacy segment operating revenues fell 25.3% year over year to $1.77 billion.
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Can Lumen's Expanding NaaS Business Drive Top-Line Growth?
Key Takeaways
Lumen Technologies (LUMN - Free Report) is seeing strong momentum in its Network-as-a-Service (NaaS) business as enterprises shift to on-demand connectivity to support AI and multi-cloud workloads. While the company continues to face pressure from legacy revenue headwinds, management is increasingly positioning NaaS and broader digital services as key top-line drivers.
In the first quarter of 2026, NaaS active customers were up 25% sequentially. Active ports rose 35% sequentially, while services sold across ports increased 32% from the prior quarter. The company witnessed strength in off-net and large enterprise wins.
Lumen now has 2,500 NaaS customers, with more than 30% repeat purchasers. Notably, more than 20% of new NaaS adopters in the quarter were entirely new to Lumen, suggesting it is gaining incremental market share with this platform.
Lumen Technologies, Inc. Price, Consensus and EPS Surprise
Lumen Technologies, Inc. price-consensus-eps-surprise-chart | Lumen Technologies, Inc. Quote
Management further added that, among the existing customers, more than 60% of first-time adopters expanded their footprint rather than simply migrating legacy services.
Upselling trends further reinforce demand strength. Lumen added that about 25% of NaaS customers are attaching multiple services per port, particularly in security offerings like DDoS protection. This points to rising wallet share and customer engagement.
Financially, the NaaS opportunity is meaningful but gradual. Digital revenues were $37 million, while other strategic revenues were $1,131 million in the first quarter. At its Investor Day, LUMN noted digital capabilities, including NaaS, Edge Solutions, Security and the Connected Ecosystem, are expected to deliver between $500 million and $600 million of incremental revenues exiting 2028 and $800-$900 million by 2030.
Lumen’s expanding NaaS business is emerging as a key driver of top-line growth. But the impact will likely be gradual as the company works through legacy headwinds and scales its digital platform.
Taking a Look at Growth Drivers for Rivals
Cogent Communications (CCOI - Free Report) is a Tier 1 Internet Service Provider offering low-cost, high-speed Internet access, private network services and colocation services with ultra-low-latency data transmission. The company continues to shift its revenue mix toward higher-margin segments. Total on-net revenues (including on-net wave) in the first quarter of 2026 improved 9.1% year over year and 1.9% sequentially to $149.2 million.
Cogent Communications is benefiting from increasing customer engagement in its net-centric business, with revenues increasing 14.2% year over year and 2.3% sequentially. Surge in video traffic, AI proliferation, streaming, IPv4 leasing and wavelength sales remain primary growth drivers. However, continued weakness in legacy Sprint and off-net revenues offset gains in on-net and wavelength services.
AT&T (T - Free Report) is one of the largest wireless service providers in North America. The company continues to witness 5G and fiber subscriber growth. AT&T’s first-quarter narrative was shaped by its newer segment reporting structure, which centers on Advanced Connectivity, Legacy and Latin America.
The Advanced Connectivity segment delivered operating revenues of $28.47 billion, up 4.7% year over year, as service revenues increased 3.6% to $22.9 billion and equipment revenues improved 9.3% to $5.61 billion. However, the Legacy segment remained a drag as customers continue to migrate away from copper-based voice and data services. Legacy segment operating revenues fell 25.3% year over year to $1.77 billion.
LUMN Price Performance, Valuation and Estimates
Shares of LUMN have gained 11.2% in the past month against the Diversified Communications Services industry’s decline of 0.3%.
Image Source: Zacks Investment Research
Regarding the forward 12-month price/sales ratio, LUMN is trading at 0.83, lower than the sector’s multiple of 1.63.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for LUMN’s earnings for fiscal 2026 has been revised downward significantly over the past 60 days.
Image Source: Zacks Investment Research
LUMN currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.