Lumen Technologies (NYSE: LUMN) has entered into a definitive agreement to divest a large pool of telecommunications assets to funds managed by affiliates of private equity firm Apollo Global Management, Inc. (NYSE: APO) for US$7.5 billion.

The cash consideration includes debt assumption of approximately $1.4 billion and is subject to working capital and various other purchase price adjustments.

In the sale package, the investment giant is set to get Lumen’s ILEC (incumbent local exchange carrier) business, including its consumer, small business, wholesale and mostly copper-served enterprise customers and assets, in 20 US states.

Assets being acquired include local fibre and copper network, broadband and voice for consumer, enterprise and wholesale customers, fibre and copper connectivity to enabled buildings, connectivity to tower sites, and central offices.

Under the terms of the transaction which is expected to close in the in the second half of 2022 subject to customary closing conditions including required regulatory approvals, Lumen will retain its ILEC assets in 16 states, as well as its national fibre routes and CLEC (competitive local exchange carrier) networks.

Jeff Storey, Lumen president and CEO, said: “This transaction is an important step in our continued efforts to transform Lumen and drive future growth for our company.

“We are pleased with the attractive valuation we received for these assets, which highlights the overall value of Lumen’s extensive asset portfolio. Apollo Funds will receive a great business with a strong customer base, dedicated employees, and a platform for future growth.”

Aaron Sobel, Private Equity Partner at Apollo, added: “The team at Lumen has built a great business and we see an incredible opportunity to provide leading edge, fibre-to-the-home broadband technology to millions of its business and residential customers.

“Our investment will help accelerate the upgrade to fibre optic technologies, and we are excited to have such a high-calibre management team ready to bring faster and more reliable internet service to many rural markets traditionally underserved by broadband providers.”

Citi, Goldman Sachs, Bank of America, and Morgan Stanley served as financial advisors to Lumen in the transaction and Jones Walker served as legal counsel. Advisors to the Apollo Funds include Mizuho, LionTree, Barclays and Credit Suisse as financial advisors; Altman Solon as telecommunications, media and technology consultant; and Paul, Weiss, Rifkind, Wharton & Garrison LLP as lead legal counsel, together with Jenner & Block LLP and Morgan Lewis & Bockius LLP as regulatory counsel.

Lumen has also reported Q2 2021 results, with total revenues of $4.924 billion for the, compared to $5.192 billion for the second quarter 2020.

Net income reached $506 million for the second quarter 2021, compared to reported net income of $377 million for Q2 2020. Generated Adjusted EBITDA was $2.109 billion for the Q2 2021, compared to $2.135 billion for the second quarter 2020, excluding Special Items of $20 million and $50 million, respectively.

Over the last quarter, the Monroe, La., company also announced significant divestiture transactions to accelerate investment in key growth areas, include the sale of its Latin America business to Stonepeak Infrastructure Partners for $2.7 billion.

CEO Storey said: “Lumen delivered solid Adjusted EBITDA and Free Cash Flow in the second quarter, and we are executing on our strategy to optimize the Lumen asset portfolio, positioning the company for future growth.

“We are well-positioned strategically with our significant and accelerating fibre investments across both Business and Mass Markets.”