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What’s Happening With CenturyLink and Level 3? How Will These Operations Overlap?

Network

By Jayne MillerNov 1, 2016

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Yesterday CenturyLink confirmed the rumors, announcing that they’ve reached a cash-and-stock deal to buy Level 3 Communications for around $25 billion.

Here’s what’s happening.

It’s been reported that CenturyLink agreed to swap $26.50 in cash and 1.4286 CenturyLink share for each share of Level 3.

Under the deal terms, CenturyLink shareholders will own approximately 51% and Level 3 shareholders will own roughly 49% of the combined company. (You can read more about that in TeleGeography’s CommsUpdate.)

According to the press release issued by CenturyLink, the transaction is expected to close by the end of the third quarter 2017. Until then, both will operate as separate, independent companies.

Glen Post, leader of CenturyLink since 1992, will serve as CEO of the company, once combined. Level 3 Chief Financial Officer Sunit Patel will be the new CFO.

This transaction increases CenturyLink’s network by 200,000 route miles of fiber, which includes 64,000 route miles in 350 metropolitan areas and 33,000 subsea route miles.

A quick look at the companies involved: CenturyLink provides broadband, voice, video, data, and managed services over a 250,000-route-mile U.S. fiber network and a 300,000-route-mile international transport network.

Level 3 Communications provides local, national, and global communications services to enterprise, government, and carrier wholesale customers in more than 500 markets in over 60 countries.

CenturyLink’s press release touched on how this merger will impact their portfolio:

“This transaction increases CenturyLink’s network by 200,000 route miles of fiber, which includes 64,000 route miles in 350 metropolitan areas and 33,000 subsea route miles connecting multiple continents.

The release went on to mention future broadband infrastructure opportunities:

“This transaction will provide the combined company with increased opportunity to invest in its broadband infrastructure and enhance broadband speed for small businesses and consumers.”

What Level 3 and CenturyLink have in common is that they’ve been two of the most acquisitive telecom operators of the past two decades.

It’s been speculated that CenturyLink has been looking to upgrade its network with fiber-optic lines to compete with AT&T Inc., Verizon Communications Inc., and others in the cable industry.

Level 3, meanwhile, runs one of the largest internet backbones in the world. A network builder of the late 1990s, it is currently the number one upstream provider to broadband ISPs in the U.S.

CenturyLink, Level 3 U.S. Network Map

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What Level 3 and CenturyLink have in common is that they’ve been two of the most acquisitive telecom operators of the past two decades. Their current merger represents the culmination of dozens of smaller acquisitions over the years. (CenturyLink alone formed from a merger between CenturyTel and Embarq in 2009.)

With this in mind, there’s already a lot of overlap on the U.S. networks side.