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Apollo’s race to 5 million passings meets a $12.5B debt stack and a 2027 liquidity cliff

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Brightspeed, Apollo’s 20-state ILEC carve-out from Lumen, has burned $5.6 billion of cash since its 2022 acquisition to pass 3 million fiber locations. That is nearly double the original $3 billion LBO cost estimate, as competition for qualified construction labor pushed deployment costs well above underwriting. The debt-funded buildout lifted gross debt to $12.5 billion as of March 2026.

Competition is capping fiber adoption and pricing power. Fixed wireless from T-Mobile and Verizon plus aggressive cable pricing and bundles have narrowed Brightspeed’s high-speed advantage across its rural and suburban footprint. Fiber penetration sits near 20%, against the 43% terminal assumption at acquisition, and the company now sells fiber at $49 per month, well below the $62.41 ARPU modeled at underwriting. Copper churn outpaces fiber additions, pulling revenue and EBITDA lower.

Octus expects 2026 cash burn to come in modestly below the $2.2 billion of negative free operating cash flow Brightspeed recorded in 2025, then step down further in 2027 as the buildout approaches the 5 million passing target. Against $2.2 billion of liquidity as of March 31, 2026, that leaves runway through the first quarter of 2027. The $861 million of BEAD grants or lower capex would extend it.

Apollo is accelerating the build to 5 million passings, or 70% of the 7 million total footprint, to reposition Brightspeed as a strategic exit candidate. A sale is a hard sell: likely buyers already carry wide 5G home internet coverage, and Brightspeed’s operating trajectory is weakening. Absent a step change in penetration and topline growth, restructuring is the more likely outcome.

Creditors are organizing. First-out term loan holders are working with Gibson Dunn and certain second-out lenders are represented by Davis Polk. Brightspeed has retained Akin Gump as legal advisor and PJT Partners as financial advisor. The first-out and second-out term loans trade at about 92.5 and 67, and the senior secured notes trade at 98 for an 11% yield. That 25-point gap between the first-out and second-out marks is where the market has drawn the recovery line.

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