Lumen Technologies is selling its Latin America business to Stonepeak, an alternate investment firm, for $2.7 billion.

Under the terms of the agreement, Lumen will divest its Latin America business. It will then will operate as an independent, U.S.-headquartered portfolio company of Stonepeak (the “New LATAM Company”).

The Latin American leadership team and organization will remain in place, led by Hector Alonso, Lumen’s president for the region. Lumen will also retain a strategic relationship with the new company and continue to serve joint customers in the region.

Lumen and Stonepeak expect the transaction to close in the first half of 2022. It’s subject to regulatory approvals in the United States and certain countries where New LATAM Company operates.

Continuing Opportunities for Lumen Partners in Latin America

Garrett Gee is Lumen‘s senior vice president of indirect sales.

Lumen Technologies’ Garrett Gee

“As part of the strategic partnership we created, our channel partners can continue to serve their customers’ needs in Latin America,” he said. “They will also have the opportunity to work directly with the New LATAM Company.”

The new company and Lumen will form a close partnership that can facilitate the delivery of Lumen’s global solutions within Latin America, Gee said.

“Both companies retain the flexibility to enter agreements with other regional vendors who provide adaptable, low-latency solutions to meet customer needs,” he said. “Lumen will also be a strategic partner for the New LATAM Company for its needs outside of Latin America and will continue to serve its North American, EMEA and APAC customers with needs in Latin America through its strategic relationship with the New LATAM Company. By leveraging the New LATAM Company’s strong data and connectivity presence throughout Latin America, Lumen will help its customers succeed in the ‘4th Industrial Revolution.'”

The transaction provides additional capital to enable Lumen to accelerate investments in key growth areas. It also enables greater flexibility on capital allocation, allowing for debt reduction and the continued evaluation of share repurchases.

Supporting Lumen’s Overall Growth Strategy

“This transition supports our overall growth strategy, and benefits our shareholders and customers,” Gee said. “Lumen’s Latin American business is predominantly oriented toward serving Latin American companies. While this is an attractive market opportunity, Lumen does not need to own the business to achieve our goals of supporting the majority of our enterprise customers, most of whom are in the United States and EMEA.  The deal will enable Lumen to redeploy capital and focus on our growth. It allows us to drive better customer service in LATAM by allowing local management to focus on key trends within each country or addressable market within the region. Overall, the transaction creates a key partnership between Lumen and the New LATAM Company with mutually beneficial objectives.”

This deal comes after news broke earlier this month that Apollo Global Management wants to acquire consumer assets from Lumen in a deal worth more than $5 billion. There’s been no further news about a potential deal.

Brian McMullen is Stonepeak’s senior managing director.

“Lumen’s Latin American business is a market leader with a strong footprint and exciting potential for expansion,” he said. “Stonepeak has been an early and active investor in digital infrastructure globally. And we are looking forward to applying our experience and additional capital to Lumen’s Latin American business.”

AustralianSuper, Australia’s largest pension fund, is investing alongside Stonepeak in the transaction.