Can Level 3 Execute the Perfect Merger?
On the surface, the Level 3 Communications acquisition of tw telecom seems an ideal marriage of a company with fat fiber optic pipes and global reach and one with strong metro network connections and a solid reputation in the enterprise segment.
Factor in Level 3 Communications Inc. (NYSE: LVLT)'s connections to data centers and tw telecom inc. (Nasdaq: TWTC)'s dynamic bandwidth capacity services and it just keeps getting better. In a market where size and scale counts, this merger seems to have it all.
All of those complementary capabilities and synergies mean nothing, however, unless the new Level 3 can execute on the strategy of integrating the networks, trimming any overlapping facilities for maximum efficiency and retaining the best set of products going forward. And that challenge has landed right in the lap of Level 3 CTO Jack Waters. (See Level 3 CTO Jack Waters: Network Integration Guru.)
Assuming this deal is approved -- and there doesn't seem to be any chorus of voices in opposition -- its success depends on how that execution provides the sales force with a definable product advantage over the large incumbents against whom Level 3 competes, as well as giving the field office and technical support folks the tools they need to deliver quality service.
One thing that tw telecom developed in recent years was a reputation for excellent service and for close ties to its customers. The dynamic bandwidth control product the company has been rolling out over the last couple of years was an example of its response to customer demand.
For me, one early indication of whether Level 3 is moving in the right direction on this particular merger will be if the dynamic bandwidth control and accompanying customer portal become standard issue for Level 3's services. That's not something that can happen overnight -- it involves back-office integration that Waters admits is the hardest part of any merger. But making that a priority should be one of the first post-merger statements.
In a recent conversation with Light Reading, Waters played his cards close, not tipping his hand on what services will emerge, given that the merger has not yet gone through. Find the report from our chat here in our Prime Reading section and rest assured that once the merger does go through, we'll be watching.
— Carol Wilson, Editor-at-Large, Light Reading