Lumen narrows loss, lifts free cash flow forecast on tax savings

By Akash Sriram

July 31 (Reuters) - Lumen Technologies LUMN.N on Thursday reported a smaller-than-expected second-quarter loss and raised its full-year free cash flow forecast by more than 60%, helped by cost savings from President Trump's tax cut legislation.

The telecom and networking firm posted an adjusted loss of 3 cents per share, compared with analysts' expectations of a 26-cent loss, according to data compiled by LSEG.

Lumen now expects 2025 free cash flow between $1.2 billion and $1.4 billion, up from a prior range of $700 million to $900 million.

"We're taking it up considerably because of strong performance, but also because of the new tax bill, that definitely benefited us and that allows us to invest," CFO Chris Stansbury told Reuters in an interview.

The new tax law enables companies such as Lumen to deduct more interest expenses and speed up how quickly they write off big investments, boosting near-term cash flow.

Revenue for the quarter ended June 30 was $3.09 billion, slightly below analysts' average estimate of $3.11 billion.

The shortfall included a $46 million giveback tied to the FCC's Rural Digital Opportunity Fund (RDOF), following the sale of Lumen's consumer fiber business to AT&T T.N.

Lumen agreed in May to sell its consumer fiber business to AT&T for $5.75 billion in cash, a move aimed at sharpening its enterprise focus and reducing capital expenditures.

The company also recorded a one-time non-cash goodwill impairment charge of $628 million tied to the divestiture, contributing to a net loss of $915 million for the quarter.

Stansbury said the divestiture would reduce annual capital expenditures by about $1 billion while trimming adjusted core earnings by $150 million.

Lumen reaffirmed its full-year adjusted EBITDA guidance of $3.2 billion to $3.4 billion and said it expects to reach the high end of that range.