Why Are Lumen Technologies Shares Down Today?

Lumen Technologies Inc. LUMN shares traded lower Tuesday following reports that AT&T is in talks to acquire the company's consumer fiber business.

What To Know: The potential deal, which is still in negotiations, could be valued at more than $5.5 billion, though terms are not final and talks may still collapse. Neither Lumen nor AT&T has commented about the discussions.

Lumen's stock initially dropped as much as 13% to $4.26 earlier in the day, bringing its market capitalization to approximately $4.4 billion. Meanwhile, AT&T Inc. T shares rose 1.1% to $27.27, giving it a market value of about $196 billion.

At a recent industry conference, Lumen's CFO Chris Stansbury acknowledged the possibility of selling its fiber-to-the-home business, stating the company would not be a consolidator in the increasingly competitive fiber market. He pointed to other major deals in the sector, including Verizon's planned acquisition of Frontier Communications and BCE's agreement to buy Ziply Fiber.

Stansbury noted that bundling fiber and wireless services strengthens large providers by reducing customer churn and increasing pricing power.

He also confirmed Lumen's fiber unit attracted significant interest from buyers. If a deal is completed, it would likely help Lumen reduce its debt load. Investors appear to be reacting negatively to the uncertainty surrounding the sale and the company’s longer-term position in the fiber market.

LUMN Price Action: Lumen Technologies shares closed Tuesday down 9.47% at $4.40, according to Benzinga pro.