In a transaction that reflects the changing landscape of internet infrastructure, Akamai and Lumen announced a transaction yesterday. Lumen has sold ‘select Content Delivery Network service contracts’ to Akamai. The deal enables Akamai to consolidate more revenue onto its platform and allows Lumen to refocus further on connectivity.
Of course, Lumen’s CDN business derives from that of Level 3 Communications, which envisioned leveraging its IP backbone and global asset base to gain an advantage in the content world. They did pretty well at it, but the tide moved in the other direction. Rather than the CDN world becoming more tightly tied to infrastructure, it drifted steadily deeper into the cloud side of things.
It’s not that there is no overlap, but there seems to be a growing clarity between the worlds of cloud connectivity and that of managed cloud services. Running a CDN simply falls on the other side of the line from where Lumen is spending its main effort these days. So a decade after entering the space, Lumen’s decision to sell out to Akamai pretty much ends the experiment.
In monetary terms, Akamai will be acquiring some $40-50M in annual revenue in the deal, and expects to see an extra $0.08-0.12 of non-GAAP earnings per share next year as a result. No personnel or technology will be changing hands, and the two companies have a 90-day transition plan in place. Afterwards, Lumen plans to wind down its CDN platform. The price tag on the deal was not disclosed, but may become clearer later in regulatory filings.
If you haven't already, please take our Reader Survey! Just 3 questions to help us better understand who is reading Telecom Ramblings so we can serve you better!
Categories: Content Distribution · Mergers and Acquisitions
Join Our LinkedIn Group
And thank God for that. Because Level 3 was never really into open connectivity for its CDN, it was limited in the traction it could obtain. There’s a reason why Akamai, Cloudflare, etc. have very open peering policies. If your customer pays you to distribute their content as quickly as possible, you can’t be stingy with peering.