& cplSiteName &

Level With Me: When Rumors Get Real

Carol Wilson
6/16/2014
50%
50%

Sometimes you hear a rumor so often that you stop listening to it. Such was the case for me with the Level 3/tw telecom deal that finally happened today.

tw telecom inc. (Nasdaq: TWTC) has been a targeted acquisition in the rumor mill for so long that it was hard to take the latest round of rumors seriously. (See Level 3 to Acquire tw telecom for $5.7B.)

Obviously, however, rumors persist for a reason. Consolidation is a pervasive trend in telecom, and this is the latest example of why bigger is usually better for competing.

This deal is good for Level 3 Communications Inc. (NYSE: LVLT)'s new focus on enterprise services, because tw telecom is the premier Ethernet services provider in the country, according to rankings from people such as Vertical Systems Group and industry reputation. Level 3 has tremendous fiber backbone resources and content delivery deals, while tw telecom has the local fiber reach and strong business market play -- much stronger than what Level 3 has had in the past.

Twice in the past year I've had executives from tw telecom competitors volunteer the fact that they purposely avoid going head-to-head with that particular service provider -- if tw telecom has direct connections to an office building and is actively selling services there, these two competitors look elsewhere to invest their own fiber dollars. The reason was the level of service that tw telecom was delivering and the recognition that it would be hard to beat.

The question for Level 3 will be how this integration is handled and if the combined company can perpetuate the level of service for which tw telecom has become known in the Ethernet world, or whether the integration process itself becomes an issue.

In the past, Level 3 has stumbled somewhat in managing the integration of large acquisitions -- this could well be a case of seeing what was learned from those previous problems.

As I wrote about earlier this year, tw telecom took a different tack when it absorbed a large fiber optic network operator Xpedius, back in the mid-aughts. CEO Larissa Herda and her team decided to bite the bullet and invest heavily in creating a single integrated backend from a hodgepodge of systems. Will Level 3 maintain this kind of integration and commitment. Does it need to? (See Doing the Dirty Work Pays Off.)

So while this may well be an obvious coming together of two players to create one, much larger, more competitive entity, there are still some questions hanging out there to be resolve.

— Carol Wilson, Editor-at-Large, Light Reading

(6)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
Kreskin
50%
50%
Kreskin,
User Rank: Moderator
6/17/2014 | 5:56:13 AM
Re: Not Made in Heaven
One thing I put little currency in are Wall Street Analysts.

 

They brought us the Internet crash.  The telecom crash of insatiable demand - build it and they will come.

 

And of cousre, the "Too big to Fail" Financial collapse.

 

Finf me a Wall Street Analyst that has actual operating experience and was successful -- then they may have credibility.  Otherwise, they just run numbers.
Carol Wilson
50%
50%
Carol Wilson,
User Rank: Blogger
6/16/2014 | 8:40:40 PM
Re: Not Made in Heaven
I actually might have agreed with that assessment more if it weren't for some analysts chiming in - apparently Level 3 has been cleaning up its act, of late, and this may not be as much of a culture clash as it once was. 

I do think it will be interesting to see if the new entity can rise to tw telecom's standard. One indication will be how many of the key tw telecom leadership team are retained.
Kreskin
50%
50%
Kreskin,
User Rank: Moderator
6/16/2014 | 8:02:38 PM
Not Made in Heaven
 

Talk about two totally different cultures -- there is going to be some serious clashes.

Level 3 is a low price player and TWTC is a value player with great discipline, systems and processes.

It's like a High School (Level 3) acquiring an Ivy League University (TWTC).
danielcawrey
50%
50%
danielcawrey,
User Rank: Light Sabre
6/16/2014 | 5:47:43 PM
Re: Once in play; always in play
I think that these types if integrations are indeed difficult. But it is not like the two parties probably do not realize this. A merger like this must be a risk vs. reward proposition. And in order to spend all of this time and money to make it happen there must be some sort of plan to make all the moving parts work together. 

At least, one would think so. 
Ariella
50%
50%
Ariella,
User Rank: Light Sabre
6/16/2014 | 12:27:32 PM
Re: Once in play; always in play
This reminded me of a rumor that turned out true in my neighborhood several years ago. The rumor was that two private schools were going to combine. People said it seemed so unlikely that it probably was true. Though the principal of one denied it, the merger did take place. However, it proved a difficult marriage, and the two entities divorced just a few years later. 
bosco_pcs
50%
50%
bosco_pcs,
User Rank: Light Sabre
6/16/2014 | 12:06:07 PM
Once in play; always in play
Carol:

 

Once something (credible) is in play, it tends to stick around. The only one I can remember that ever got away is GE-Honeywell marriage so long ago and that is because of their sheer size. Look at Sprint and T-Mobile and you can tell the stickiness especially in the size matters area. Of course, the recent growth desperate environment really exacerbates the M&A frenzy. Be thankful it is so much harder for this space to do domicile inversion like the medical space!

 

Just some random musings
More Blogs from Rewired
AT&T and Verizon are vying for the status of biggest OpenStack champion, a stunning reversal for the open source software and a sign of things to come.
FCC proposes forcing broadband ISPs to get explicit consent from customers before using browsing data, ignoring the real online privacy threats.
Forget the 'Thrilla in Manila'; the competitive battle among open MANO groups will more likely be fought with Manila folders than fisticuffs.
Done well, targeted video ads based on Internet browsing history wouldn't be such a bad thing, but there are trust and transparency issues to address.
Virtualization is critical to telecom's future but it could open up a new can of net neutrality worms – the time to talk about that is now.
From The Founder
The independent evaluation of Nokia's key virtual network functions (VNFs) was a defining moment for the Finnish giant.
Flash Poll
Live Streaming Video
Charting the CSP’s Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it’s going from two industry veterans.
LRTV Custom TV
Cisco's Innovations in Cable

5|26|16   |   03:18   |   (0) comments


Marc Aldrich from Cisco discusses the latest in security, the evolution and momentum for CCAP and what the industry will be seeing next from Cisco.
LRTV Documentaries
Leading Lights 2016 Highlights

5|25|16   |   02:26   |   (1) comment


Some of the high points from this year's Leading Lights awards dinner at the Hotel Ella in Austin, Texas.
LRTV Documentaries
Light Reading Hall of Fame 2016

5|23|16   |   05:43   |   (0) comments


Find out who has been welcomed into Light Reading's Hall of Fame this year.
LRTV Custom TV
ZTE TM Forum Highlights

5|23|16   |     |   (0) comments


ZTE showcased its new ICT solutions at TM Forum in Nice.
LRTV Interviews
Gamma's MD on the Emergence of UC2

5|20|16   |     |   (0) comments


Gamma Communications Managing Director David Macfarlane believes the unified communications (UC) market has reached a tipping point.
LRTV Custom TV
The Ultimate 5-Minute Guide to Digital Customer Engagement

5|20|16   |     |   (0) comments


In this short video, you will hear all about how Digital Customer Engagement is the key to meeting customer expectations, keeping them happy, and maximizing revenue. VP Product & Marketing at Pontis, Ofer Razon, breaks down for us the five essential capabilities for successful Digital Customer Engagement. Don’t miss!
LRTV Custom TV
NFV in 2016: Part 1 – NFV Use Cases Get Real

5|19|16   |   05:57   |   (0) comments


Consensus is building around the key use cases for NFV, including managed IP services at the network edge and on customer premises, which can generate new revenues from enterprises/SMBs and consumers; Evolved Packet Core to support LTE migration; and adjacent technologies, such as TAS and IMS, to support VoLTE and next-generation charging and policy control ...
LRTV Custom TV
Nokia's Steve Vogelsang on NFV – Part 3

5|19|16   |     |   (0) comments


Steve Vogelsang discusses the challenges of operational transformation and how Nokia helps its customers. Join Steve at the Big Communications Event in Austin the morning of May 24, on his keynote and optical networking panel.
LRTV Interviews
Level 3: Why UC Is In Demand

5|17|16   |   04:12   |   (1) comment


Andrew Edison, Level 3's senior VP of sales, EMEA region, talks about the drivers of growth in the unified communications services market.
LRTV Custom TV
ARM's OPNFV Action

5|17|16   |     |   (0) comments


At the ARM booth at MWC 2016, Joe Kidder and Bob Monkman speak to Light Reading about OPNFV and their upcoming action.
LRTV Custom TV
Nokia's Steve Vogelsang on NFV – Part 2

5|16|16   |     |   (0) comments


Steve Vogelsang gives advice to service providers on how to move to NFV. Join Steve at the Big Communications Event in Austin the morning of May 24, on his keynote and optical networking panel.
LRTV Interviews
Interoute CTO on NFV's Maturity

5|13|16   |   06:46   |   (1) comment


Matt Finnie, CTO at international operator Interoute, explains how NFV has made life easier in terms of logistics and how Interoute can now enable a 'software-defined moment' for its customers.
Upcoming Live Events
September 13-14, 2016, The Curtis Hotel, Denver, CO
December 6-8, 2016,
June 16-18, 2017, Austin Convention Center, Austin, TX
All Upcoming Live Events
Infographics
A new survey conducted by Heavy Reading and TM Forum shows that CSPs around the world see the move to digital operations as a necessary part of their overall virtualization strategies.
Hot Topics
DT: Telcos Must Escape Vendor Prison
Iain Morris, News Editor, 5/24/2016
AT&T to Start 5G 'Friendly' Trial by 2016 End
Dan Jones, Mobile Editor, 5/24/2016
Cisco's Patel Hails 'Microculture' Successes
Iain Morris, News Editor, 5/26/2016
Cable Is Eyeing Its Retail Options
Mari Silbey, Senior Editor, Cable/Video, 5/25/2016
AT&T's Margaret Chiosi Retires
Ray Le Maistre, Editor-in-chief, 5/25/2016
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
In this latest installment of the CEO Chat series, Craig Labovitz, co-founder and CEO of Deepfield, sits down with Light Reading's Steve Saunders in Light Reading's New York City office to discuss how Deepfield fits in with the big data trend and more.
Grant van Rooyen, president and CEO of Cologix, sits down with Steve Saunders, founder and CEO of Light Reading, in the vendor's New Jersey facility to offer an inside look at the company's success story and discuss the importance of security in the telecom industry.
Animals with Phones
Live Digital Audio

Our world has evolved through innovation from the Industrial Revolution of the 1740s to the information age, and it is now entering the Fourth Industrial Revolution, driven by technology. Technology is driving a paradigm shift in the way digital solutions deliver a connected world, changing the way we live, communicate and provide solutions. It can have a powerful impact on how we tackle some of the world’s most pressing problems. In this radio show, Caroline Dowling, President of Communications Infrastructure & Enterprise Computing at Flex, will join Women in Comms Director Sarah Thomas to discuss the impact technology has on society and how it can be a game-changer across the globe; improving lives and creating a smarter world. Dowling, a Cork, Ireland, native and graduate of Harvard Business School's Advanced Management Program, will also discuss her experience managing an international team focused on innovation in an age of high-speed change.