Is the next big telecom M&A deal on the horizon?

• A sale of Lumen’s consumer fiber biz is probably the most likely deal to happen 2025, according to analysts
• Other possible transactions, like a Comcast/Charter merger, are a bit more far-fetched
• Changes to copper retirement policy could pave the way for more M&A activity

From Verizon’s $20 billion Frontier acquisition to T-Mobile’s fiber joint ventures with Lumos and Metronet, 2024 was quite the eventful year for telecom deals. But it begs the question: Is more M&A on the horizon for 2025 – and how will regulatory changes impact that activity?

According to New Street Research, the biggest and most likely deal to surface this year is the sale of Lumen’s Mass Market business, its consumer fiber operation. Considering how laser-focused Lumen has been on chasing AI growth to support enterprises and data centers, the idea it could offload residential fiber to further double down on that goal doesn’t sound too far-fetched.

Indeed, Reuters in December reported Lumen is working with investment bankers to gauge interest from potential acquirers and that a deal could even be a joint venture with a “strategic partner.” But talks are still in the very early innings, sources said.

It’s no secret Lumen’s legacy telco business has been on the downswing. CEO Kate Johnson in November said plainly it’s difficult to imagine long-term success for Lumen in the traditional telco space. Lumen has already taken steps to offload some broadband assets, notably in 2022 when it sold off its ILEC business in 20 states to Brightspeed.

“The strategic value at Lumen lies in the fiber asset combined with the copper locations that can be upgraded with attractive economics,” NSR’s Jonathan Chaplin wrote in a note to investors this month. 

Lumen has around 13 million locations that fall into this category, Chaplin said, most of which are in the major U.S. cities.

Recon Analytics principal Roger Entner told Fierce a Lumen Mass Markets sale is “the only M&A that makes sense.” Aside from that, only small rural telcos remain up for grabs (though there is an abundance of those, as Alix Partners has noted).

“We will see the same rollup on small rural telcos that we saw over the last 20 years for small rural mobile providers,” Entner said.

Rocky regulatory environment

With FCC Chair Brendan Carr promising more deregulation, the telecom industry certainly feels more optimistic about M&A prospects.

According to PwC, “we expect a robust 2025 M&A market due to pent-up demand which may have been sidelined due to regulatory concerns.” Similarly, Deloitte said private equity activity is poised to further pick up this year. “As telcos start divesting again, PE is back with record levels of dry powder— over US$300 billion of available capital to invest in longer-duration, high-yield infrastructure assets,” the firm said.

As wild as it sounds, there have even been rumors swirling around a merger between cable giants Comcast and Charter or that T-Mobile could make a play for Charter. If these companies do decide to get entangled in M&A, it won’t necessarily be smooth sailing.

NSR Policy Analyst Blair Levin said Comcast and Charter have collaborated on multiple initiatives, such as a joint streaming platform and a partnership to develop “unified” DOCSIS 4.0 chips alongside Broadcom, that “have not raised antitrust objections.” However, “there is still the risk of political opposition that could crater the effort,” he wrote in January.

Comcast is already in not-so-good graces with the FCC, as Carr in February launched an investigation into the company for its DEI initiatives. The Commission later did the same to Verizon, with Carr simultaneously calling attention to the pending Frontier acquisition.

Conversely, a Charter/T-Mobile deal might see less political backlash but more antitrust concerns, Levin said, given both providers offer wireless services (though Charter does so as a mobile virtual network operator riding on Verizon’s network).

“If the government does regard [Charter and T-Mobile] as competitors in wireless, it could decide to block the deal on those grounds,” he said.

In Entner’s opinion, any sort of M&A between these three is too far a stretch. “I don’t think Charter/Comcast/T-Mobile in any permutation will happen,” he stated.

Copper concerns

As Entner told us in February, all the legacy copper remaining in fiber networks is a big reason why operators like AT&T are not chasing more M&A.

Regarding a Lumen transaction, Chaplin said the company has roughly 8.8 million locations that are considered “non-upgradable copper assets.” The major operators don’t really want those, but the easiest way to acquire Lumen’s consumer fiber biz is “to buy the whole thing and then sweat and eventually decommission the residual copper.”

The FCC could offer a helping hand. USTelecom in February petitioned the agency to change its policy and make it easier for operators to discontinue voice services.

Essentially, the trade group wants the FCC to waive the “stand-alone” voice service requirements of the agency’s Alternative Options Test, arguing broadband consumers nowadays do not typically seek standalone voice offerings.

Levin thinks the FCC will move “relatively quickly” to grant this petition, given Carr seems to be in favor of assisting operators with copper retirement. 

Speaking at a press conference after the FCC meeting last month, Carr said when it “comes to copper networks in this country, this is one of the things I’m going to look closely at as part of our agenda.”

In turn, the many mid-sized ILECs that have upgraded some, but not all, of their network to fiber could become “more attractive to buyers of fiber assets,” Levin concluded.