Lumen Technologies is acquiring cloud networking platform Alkira for $475 million to strengthen its ‘east-west’ DCI strategy, and bolster its programmable NaaS roadmap to cover all the compass points – from the enterprise to cloud, and the US to everywhere. A steady Q1, otherwise.
In sum – what to know:
Deal strategy – Lumen is buying Alkira for $475m to strengthen its position in cloud-to-cloud (east-west) and AI-driven data centre interconnect traffic, alongside enterprise cloud access (north-south workloads).
Platform integration – The deal accelerates Lumen’s NaaS and digital platform strategy, integrating Alkira’s orchestration layer with its Multi-Cloud Gateway to unify routing, policy, and connectivity across domains.
Financial shift – Lumen reported a revenue decline and net loss in a transitional first quarter, but improved its business mix as “strategic” digital and NaaS revenues rose to 51% of total revenue for the first time.
Lumen Technologies is to buy networking platform Alkira for $475 million to strengthen its ‘east-west’ data center interconnect (DCI) proposition, going between major cloud and AI clusters. Lumen called Alkira a “bridge” for the firm “between east-west and north-south” AI traffic – as a carrier of both lucrative AI training workloads between cloud regions and new AI inference streams on enterprise delivery networks. The San Jose firm is a “bull’s eye” for Lumen’s M&A strategy, it suggested, in terms of both its “strategic alignment and value creation”.
It listed the ways: an accelerated network-as-a-service (NaaS) roadmap (“from years to months”), a market-ready API partner platform (“from day one”), plus reduced risk and skilled staff. “Exciting” is the word – for Kate Johnson, chief executive at the firm, speaking on an earnings call yesterday (May 5) following a steady first-quarter showing (lower revenue, better mix; see here and below). She said: “[Alkira] gives us access into DCI and cloud-to-cloud connectivity, which is the fastest-growing part of the market – growing, we think, 20 percent CAGR, which is pretty darn exciting.”
She added: “If you take our installed base of customers… and [plug it into] the commercial engine we’re going to create [with] Alkira, it becomes a pretty exciting accelerant. It gives us new access to much more significant TAM (total addressable market), growing at a much faster rate.” Alkira serves enterprises globally in the financial, technology, retail, healthcare, and manufacturing industries. It has a “number of customers”, but its revenue is “relatively small”, clarified Christopher Stansbury, president and chief financial officer at Lumen, on the call.
Orchestration platform
But the “bull’s eye” is the platform. Following the deal, expected to close in the third quarter, Lumen will get a “single pane-of-glass” control plane (combining “connectivity, policy, routing, and services”) to orchestrate connectivity (“design, deploy, and operate networks as software”) across data centers of all varieties, plus partners and carriers. Deeper integration will follow, it said. The strategy is to bring better programmability to its network service – to improve its core platform (Lumen Connect) and use the platform to grow its portfolio of higher-value ‘digital’ services.
The transaction is expected to be neutral to margin in the near term and accretive as the digital platform scales, said Lumen. Stansbury said on the call: “We’ve said we’d be interested in technology assets only if they enhance our product portfolio, only at a reasonable valuation, and only if [they are] accretive to the broader financials. And Alkira checked all those boxes. The Alkira acquisition will enhance Lumen Connect and expand our digital offerings across the east-west TAM, with the potential to accelerate digital revenue as adoption scales.”
The ambition to replace “manually-configured provider-by-provider builds”, assembled across disparate carriers and portals, with unified management, consistent policy, total visibility, and on-demand service is the same for every telco, whether supplying fixed or mobile. But Lumen reckons it can “define a new category”, as such. Stansbury said: “What Alkira brings is really the brain of that control plane and the ability to connect those things together and move workloads from anywhere to anywhere: one network, every cloud; total control globally – as Kate said.”
Once integrated, the Alkira product will unify Lumen’s on-net (direct to enterprise) and off-net (indirect to enterprise) services, plus its cloud on-ramps (direct to data centers), and self-service routing layer (just launched as Multi-Cloud Gateway) into a single programmable platform. In other words, it will collapse a standard fragmented connectivity stack into a single software-defined layer – so customers can provision, route, and manage traffic in a single platform wherever it is going. “That’s a big deal, and nobody else is doing that,” said Stansbury.
Specifically, the plan is Alkira will help Lumen shore-up the middle section in its proposed NaaS stack – comprising fiber network, orchestration platform, and ecosystem marketplace. It will turn network changes from “multi-month projects into real-time actions”, said Lumen in a statement. The deal will also accelerate Lumen’s “roadmap” by “several years”, and “substantially complete” its own change project. “That’s where we see the power of these things coming together, and frankly, delivering much faster, what our vision has been for the last three years.”
Compass points
As it stands, its NaaS business is concentrated in ‘north-south’ premise-to-cloud connectivity, growing important for AI inference workloads. “Lumen owns the fiber where ownership compounds value – the dense US backbone closest to its customers,” it said. Alkira gives it a leg-up in cloud-to-cloud and DCI traffic orchestration, going ‘east-west’ between big regional engine rooms, where most network investments are currently directed. It will also extend its service offer on local carrier infrastructure in international markets – “without building fiber in every geography”.
“International expansion in a capex-efficient way,” suggested Johnson on the call. “Because it’s carrier- and cloud-agnostic – and so that’s what we plan to do.” Alkira has an API‑driven “marketplace presence”, too, which will deepen developer engagement with Lumen’s own customer and partner ecosystem; it will also “fast-track” its own pre-tested reference architectures (Validated Designs). Lumen said Alkira’s footprint and functions will bring its addressable market to $70 billion – without breaking down exactly how that scans.
Alkira effectively sits on top of Lumen’s underlying network fabric in the US – spanning IP/MPLS WAN, Ethernet services, wavelength services, cloud connectivity – while Lumen’s new deals with Amazon Web Services (AWS) and Google Cloud Platform (GCP) extend that fabric all the way to the cloud edge via private last-mile and direct “prem-to-cloud” provisioning. Which (sort-of, for the enterprise user) collapses what were separate domains – enterprise access (on-net) and cloud interconnect (on-ramp) – into a single private network pathway.
But it is its new gateway routing layer, Multi-Cloud Gateway, launched in February, and its pending orchestration platform, by Alkira, that abstracts the fragmented infrastructure (access, backbone, interconnect) as a coherent single-service architecture. The Alkira acquisition will also allow Lumen to “bridge” multi-carrier off-ramp north-south (enterprise to cloud) and east-west (cloud-to-cloud) traffic, as global enterprises demand – to internalize more of the value chain, including cross-connect economics, while simplifying how enterprises scale multi-cloud networks.
Amir Khan, chief executive at Alkira, said: “We built Alkira on a single conviction: enterprise networking had to be reinvented for the cloud and AI era… By joining Lumen, we will pair our cloud-native orchestration with one of the world’s most expansive fiber networks and a proven commercial engine.” Alkira won’t be “absorbed”, explained Johnson on the call. “I’m very cognizant of the big company swallowing or suffocating the smaller company. I have a bunch of experience in the tech world of such acquisitions. We need to make sure that Alkira stays Alkira.”
She added: “What you’ll see is more of Lumen integrating into Alkira, rather than the other way around.”
First quarter
Lumen said its first quarter (2026) was in line with expectations – transitional and strategic, in other words, and a stepping stone to better growth. Its revenue was $2.899 billion in the period, down from $3.182 billion in the first quarter of 2025. Its net loss was $200 million, about level ($201 million); adjusted EBITDA was $1.279 billion, versus $830 million, mostly because of a windfall from the sale of its fiber assets to AT&T in the period; generated adjusted EBITDA was lower, at $849 million (versus $929 million). It said its “strategic revenue” from NaaS and digital services surpassed its “legacy revenue” for the first time, at 51 percent of its total revenue mix.
As well, its NaaS customer count, port adoption, and service count all grew “meaningfully” quarter over quarter, it said. Johnson stated: “We strengthened our balance sheet, reduced leverage below 4x following the fiber to the home sale, and continued to simplify our internal systems.” Stansbury added: “Strategic revenue now represents more than half of our business revenue, and we are pleased with increasing customer interest in our programmable network solutions. The pending Alkira acquisition reflects a disciplined and opportunistic capital allocation strategy that supports our path to revenue growth.”
