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Lumen vs. Verizon: Which Telecom Stock Is the Better Pick for Now?
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Key Takeaways
LUMN has $13B in PCF signed deals; Q1 2026 revenues linked to them was $78M.
LUMN to buy Alkira for $475M cash, aiming to extend cloud-to-cloud and data center connectivity.
VZ added 55K postpaid phone net adds in Q1 2026 and reaffirmed at least $21.5B in 2026 free cash flow.
Lumen Technologies, Inc. (LUMN - Free Report) and Verizon Communications (VZ - Free Report) operate in the telecommunications and fiber network space.
Verizon is one of the largest wireless service providers in the United States and one of the world’s leading telecommunications companies.
Lumen, on the other hand, is a turnaround story. The company is repositioning itself as “the trusted network for AI.” Management’s strategy is centered on three pillars: building the AI backbone, cloudifying the network and expanding a connected ecosystem of partners.
So, now the question arises: Which stock makes for a better investment pick at present? Let’s dive into the fundamentals, valuations, growth outlook and risks for each company.
LUMN: Will PCF and NaaS Bet Pay off?
Driven by significant AI-fueled connectivity demand, Lumen has secured a total of $13 billion in PCF signed deals so far. As AI needs surge, large companies across various industries are urgently seeking fiber capacity, which is becoming highly valuable and potentially scarce. Lumen recognized revenues of $78 million for the first quarter of 2026 associated with the PCF deals. Management noted that about $32 million of that figure reflected a delivery milestone payment that is not expected to repeat in the second quarter.
Beyond PCF, Lumen’s NaaS business is gaining traction as enterprises shift to on-demand connectivity to support AI and multi-cloud workloads. The company highlighted that active customers were up 25% sequentially in the first quarter. Active ports rose 35% sequentially, while services sold across ports increased 32% from the prior quarter. Lumen now has 2,500 NaaS customers, with more than 30% repeat purchasers. Management added that, among the existing customers, more than 60% of first-time adopters expanded their footprint rather than simply migrating legacy services.
Lumen’s acquisition of Alkira is a strategically important move. Alkira is a “cloud-native, carrier-agnostic” networking platform, which will extend Lumen’s programmable networking footprint into faster-growing east-west connectivity, including cloud-to-cloud and data center-interconnect. Management positioned Alkira as a control-plane software for cloud connectivity. Financially, Lumen will pay $475 million for the acquisition in an all-cash agreement and expects the deal to close in the third quarter of 2026.
Lumen continues to progress with its turnaround and is striving to boost operational efficiency. The company is anticipating $1 billion in cost savings by the end of 2027 through planned infrastructure simplification across the network, product portfolio and IT.
Lumen Technologies, Inc. Price, Consensus and EPS Surprise
Perhaps the most important development has been the company’s dedicated deleveraging efforts, including the recent sale of Mass Markets' fiber-to-the-home business (including Quantum Fiber, across 11 states) to AT&T for $5.75 billion in cash.
Management noted that the leverage post AT&T deal is now below 4x and annual interest expense has been reduced by nearly $300 million. Long-term debt as of March 31, 2026, now stands at $12.9 billion, down from $17.5 billion as of Dec. 31, 2025. Reduction in annual interest expense is expected to unlock massive cash flow gains. Lumen refinanced its revolver with a new $825 million facility.
While the growth factors appear compelling, risks remain. Lumen must sustain the cost-saving momentum while stabilizing revenues and managing its debt profile. Despite deleveraging, the debt is still hovering at about $13 billion.
Legacy headwinds remain a concern. As Lumen shifts toward newer growth products like fiber and cloud-based offerings, the secular headwinds in the legacy business will continue to prove a strain on the top-line expansion, at least in the near term. Management expects Business segment revenues only by 2028, implying at least a couple more years of structural decline.
VZ: 5G Connectivity and Fiber Expansion
Verizon’s long-term strategy remains anchored in scaling 5G and broadband together, which supports customer stickiness when mobility and home connectivity are bundled under one provider. The most important indicator was the company’s return to positive postpaid phone net additions during the first quarter for the first time in 13 years. Verizon added 55,000 postpaid net adds in the first quarter of 2026, a year-over-year improvement of more than 340,000 subscribers.
Consumer postpaid phone churn of 90 basis points (bps) in the first quarter of 2026, up from 85 bps in the previous quarter. Cost of acquisition and retention in March declined 35% compared with the end of the fourth quarter of 2025. Management noted that Verizon achieved these cost reductions while simultaneously improving postpaid subscriber additions. The company is moving away from relying primarily on promotions to drive growth.
Verizon’s broadband build continues to broaden its addressable market. In first-quarter 2026, Verizon delivered 341,000 broadband net additions, including 214,000 fixed wireless access net additions and 127,000 fiber broadband net additions, bringing total broadband connections to about 16.8 million.
The Frontier acquisition, along with the Starry buyout (fixed wireless broadband provider) expands Verizon’s opportunity in the broadband space. Frontier results are included beginning Jan. 20, 2026. Management observed that the Frontier integration was on track, and the company is focused on achieving the target of at least $1 billion of run-rate operating cost synergies by 2028.
Verizon Communications Inc. Price, Consensus and EPS Surprise
Management emphasized that broadband remains a major long-term growth opportunity because only approximately 20% of its wireless customer base currently uses Verizon broadband services.
Free cash flow generation continues to be one of Verizon’s strongest attributes. The company generated $3.8 billion of free cash flow in the first quarter, up 4% year-over-year. Verizon also reiterated its expectation for full-year free cash flow of at least $21.5 billion.
Verizon continues to prioritize shareholder returns, which is appealing to investors. The company repurchased $2.5 billion of shares during the quarter and reiterated that it remains on track for at least $3 billion of buybacks for the full year. Verizon also added that it had paid down about 50% of the Frontier debt and expects to repay all of the Frontier debt by year-end. The company hiked its dividend by 2.5%, marking the 20th consecutive annual dividend increase.
Weak underlying wireless service revenue growth, which declined 1% year over year, is a concern. Management expects consumer wireless service revenue growth to be approximately flat in 2026. Verizon also faces integration risks following the Frontier acquisition, while maintaining very high capital expenditure requirements for fiber and network expansion. First-quarter 2026 capital expenditures were $4.2 billion, and Verizon maintained 2026 capex guidance of $16 billion to $16.5 billion. Fierce competition in the U.S. wireless market remains a major concern.
Price Performance and Valuation for LUMN & VZ
Year to date, LUMN stock has gained 19.8% while VZ is up 17.4%.
Image Source: Zacks Investment Research
In terms of forward price/sales, LUMN is trading at 0.89X, lower than VZ’s 1.39X.
Image Source: Zacks Investment Research
How Does the Zacks Consensus Estimate Compare for LUMN & VZ?
Analysts have marginally revised their earnings estimates upwards for VZ for the current year.
Image Source: Zacks Investment Research
Meanwhile, for LUMN, there is a significant deterioration in earnings estimates for the current year.
Image Source: Zacks Investment Research
LUMN or VZ: Which Is a Better Pick?
Both LUMN and VZ currently carry a Zacks Rank #3 (Hold).
While Lumen offers a compelling turnaround story backed by AI-driven demand, execution risks, legacy revenue decline and still-elevated debt remain concerns.
Verizon, with its strong free cash generation and consistent shareholder returns, stands out as a relatively safer investment pick at present.
View the Zacks #1 Rank List
Image: Bigstock
Lumen vs. Verizon: Which Telecom Stock Is the Better Pick for Now?
Key Takeaways
Lumen Technologies, Inc. (LUMN - Free Report) and Verizon Communications (VZ - Free Report) operate in the telecommunications and fiber network space.
Verizon is one of the largest wireless service providers in the United States and one of the world’s leading telecommunications companies.
Lumen, on the other hand, is a turnaround story. The company is repositioning itself as “the trusted network for AI.” Management’s strategy is centered on three pillars: building the AI backbone, cloudifying the network and expanding a connected ecosystem of partners.
So, now the question arises: Which stock makes for a better investment pick at present? Let’s dive into the fundamentals, valuations, growth outlook and risks for each company.
LUMN: Will PCF and NaaS Bet Pay off?
Driven by significant AI-fueled connectivity demand, Lumen has secured a total of $13 billion in PCF signed deals so far. As AI needs surge, large companies across various industries are urgently seeking fiber capacity, which is becoming highly valuable and potentially scarce. Lumen recognized revenues of $78 million for the first quarter of 2026 associated with the PCF deals. Management noted that about $32 million of that figure reflected a delivery milestone payment that is not expected to repeat in the second quarter.
Beyond PCF, Lumen’s NaaS business is gaining traction as enterprises shift to on-demand connectivity to support AI and multi-cloud workloads. The company highlighted that active customers were up 25% sequentially in the first quarter. Active ports rose 35% sequentially, while services sold across ports increased 32% from the prior quarter. Lumen now has 2,500 NaaS customers, with more than 30% repeat purchasers. Management added that, among the existing customers, more than 60% of first-time adopters expanded their footprint rather than simply migrating legacy services.
Lumen’s acquisition of Alkira is a strategically important move. Alkira is a “cloud-native, carrier-agnostic” networking platform, which will extend Lumen’s programmable networking footprint into faster-growing east-west connectivity, including cloud-to-cloud and data center-interconnect. Management positioned Alkira as a control-plane software for cloud connectivity. Financially, Lumen will pay $475 million for the acquisition in an all-cash agreement and expects the deal to close in the third quarter of 2026.
Lumen continues to progress with its turnaround and is striving to boost operational efficiency. The company is anticipating $1 billion in cost savings by the end of 2027 through planned infrastructure simplification across the network, product portfolio and IT.
Lumen Technologies, Inc. Price, Consensus and EPS Surprise
Lumen Technologies, Inc. price-consensus-eps-surprise-chart | Lumen Technologies, Inc. Quote
Perhaps the most important development has been the company’s dedicated deleveraging efforts, including the recent sale of Mass Markets' fiber-to-the-home business (including Quantum Fiber, across 11 states) to AT&T for $5.75 billion in cash.
Management noted that the leverage post AT&T deal is now below 4x and annual interest expense has been reduced by nearly $300 million. Long-term debt as of March 31, 2026, now stands at $12.9 billion, down from $17.5 billion as of Dec. 31, 2025. Reduction in annual interest expense is expected to unlock massive cash flow gains. Lumen refinanced its revolver with a new $825 million facility.
While the growth factors appear compelling, risks remain. Lumen must sustain the cost-saving momentum while stabilizing revenues and managing its debt profile. Despite deleveraging, the debt is still hovering at about $13 billion.
Legacy headwinds remain a concern. As Lumen shifts toward newer growth products like fiber and cloud-based offerings, the secular headwinds in the legacy business will continue to prove a strain on the top-line expansion, at least in the near term. Management expects Business segment revenues only by 2028, implying at least a couple more years of structural decline.
VZ: 5G Connectivity and Fiber Expansion
Verizon’s long-term strategy remains anchored in scaling 5G and broadband together, which supports customer stickiness when mobility and home connectivity are bundled under one provider. The most important indicator was the company’s return to positive postpaid phone net additions during the first quarter for the first time in 13 years. Verizon added 55,000 postpaid net adds in the first quarter of 2026, a year-over-year improvement of more than 340,000 subscribers.
Consumer postpaid phone churn of 90 basis points (bps) in the first quarter of 2026, up from 85 bps in the previous quarter. Cost of acquisition and retention in March declined 35% compared with the end of the fourth quarter of 2025. Management noted that Verizon achieved these cost reductions while simultaneously improving postpaid subscriber additions. The company is moving away from relying primarily on promotions to drive growth.
Verizon’s broadband build continues to broaden its addressable market. In first-quarter 2026, Verizon delivered 341,000 broadband net additions, including 214,000 fixed wireless access net additions and 127,000 fiber broadband net additions, bringing total broadband connections to about 16.8 million.
The Frontier acquisition, along with the Starry buyout (fixed wireless broadband provider) expands Verizon’s opportunity in the broadband space. Frontier results are included beginning Jan. 20, 2026. Management observed that the Frontier integration was on track, and the company is focused on achieving the target of at least $1 billion of run-rate operating cost synergies by 2028.
Verizon Communications Inc. Price, Consensus and EPS Surprise
Verizon Communications Inc. price-consensus-eps-surprise-chart | Verizon Communications Inc. Quote
Management emphasized that broadband remains a major long-term growth opportunity because only approximately 20% of its wireless customer base currently uses Verizon broadband services.
Free cash flow generation continues to be one of Verizon’s strongest attributes. The company generated $3.8 billion of free cash flow in the first quarter, up 4% year-over-year. Verizon also reiterated its expectation for full-year free cash flow of at least $21.5 billion.
Verizon continues to prioritize shareholder returns, which is appealing to investors. The company repurchased $2.5 billion of shares during the quarter and reiterated that it remains on track for at least $3 billion of buybacks for the full year. Verizon also added that it had paid down about 50% of the Frontier debt and expects to repay all of the Frontier debt by year-end. The company hiked its dividend by 2.5%, marking the 20th consecutive annual dividend increase.
Weak underlying wireless service revenue growth, which declined 1% year over year, is a concern. Management expects consumer wireless service revenue growth to be approximately flat in 2026. Verizon also faces integration risks following the Frontier acquisition, while maintaining very high capital expenditure requirements for fiber and network expansion. First-quarter 2026 capital expenditures were $4.2 billion, and Verizon maintained 2026 capex guidance of $16 billion to $16.5 billion. Fierce competition in the U.S. wireless market remains a major concern.
Price Performance and Valuation for LUMN & VZ
Year to date, LUMN stock has gained 19.8% while VZ is up 17.4%.
Image Source: Zacks Investment Research
In terms of forward price/sales, LUMN is trading at 0.89X, lower than VZ’s 1.39X.
Image Source: Zacks Investment Research
How Does the Zacks Consensus Estimate Compare for LUMN & VZ?
Analysts have marginally revised their earnings estimates upwards for VZ for the current year.
Image Source: Zacks Investment Research
Meanwhile, for LUMN, there is a significant deterioration in earnings estimates for the current year.
Image Source: Zacks Investment Research
LUMN or VZ: Which Is a Better Pick?
Both LUMN and VZ currently carry a Zacks Rank #3 (Hold).
While Lumen offers a compelling turnaround story backed by AI-driven demand, execution risks, legacy revenue decline and still-elevated debt remain concerns.
Verizon, with its strong free cash generation and consistent shareholder returns, stands out as a relatively safer investment pick at present.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.