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Lumen Technologies has agreed to acquire Alkira, a cloud-native networking platform, for $475 million in cash, the company said.
Alkira enables enterprises to design, deploy, and operate connectivity across hybrid and multi-cloud environments. The deal pairs Alkira's software control plane — the layer that programs and orchestrates connectivity — with Lumen's fiber network, the company said.
Lumen CEO Kate Johnson said in a statement that combining Alkira's technology with Lumen's network would give customers "a programmable network designed for the AI era."
By folding in Alkira's global footprint and cloud-native platform, Lumen said it expects to deepen its presence in cloud-to-cloud and data center interconnect services and grow its total addressable market to roughly $70 billion.
Lumen CFO Chris Stansbury told Reuters that the acquisition "substantially completes the digital platform that we had to build" and represents capital expenditure the company would not need to make on its own.
Lumen expects little impact on margins in the short term, with earnings likely to improve as the digital platform develops. The company also said the deal supports its long-term free cash flow outlook and reduces the cost and risk of building the platform.
Alkira CEO Amir Khan said in a statement that joining Lumen would pair the startup's cloud-native orchestration with "one of the world's most expansive fiber networks."
Alongside the acquisition announcement, Lumen reported first-quarter revenue of $2.9 billion. That beat analyst expectations of $2.83 billion, according to Reuters. On a per-share basis, Lumen posted an adjusted quarterly loss of 47 cents, well short of the 13-cent loss analysts had forecast, according to Reuters.
The company raised its full-year free cash flow guidance to between $1.9 billion and $2.1 billion, up from the previous range of $1.2 billion to $1.4 billion. This change came after auditors reclassified $729 million from the AT&T consumer fiber divestiture as operating instead of investing cash flows.
The transaction is expected to close in the third quarter of 2026, subject to regulatory approvals. Morgan Stanley & Co. is serving as Lumen's financial advisor, and Latham & Watkins is serving as its legal advisor.