& 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
Software-defined WANs were the hot topic a year ago at Light Reading's NFV-SDN event, and a lot has happened since. What grabs the spotlight this year?
A quick trip in the Wilson way-back machine shows telecom operators have been at this a long time, maybe too long?
Russo, the man who cashed in pretty quickly on his first major success, Cerent, is leading a much longer-term effort to bring software-defined networking to the access realm at Calix.
SD-WAN market set to surge but it's not replacing MPLS anytime soon, and there will be security and operational challenges ahead, according to a 451 Research survey.
Lowell McAdam says cable merger no longer seems likely but is still open to other ideas – like a Comcast merger.
Featured Video
From The Founder
The 'gleaming city on a hill,' Steve Saunders calls it. But who is going to take us from today's NFV componentry to the grand future of a self-driving network? Here's a look at the vendors hoping to make it happen.
Flash Poll
Upcoming Live Events
September 28, 2017, Denver, CO
October 18, 2017, Colorado Convention Center - Denver, CO
November 1, 2017, The Royal Garden Hotel
November 1, 2017, The Montcalm Marble Arch
November 2, 2017, 8 Northumberland Avenue, London, UK
November 2, 2017, 8 Northumberland Avenue – London
November 10, 2017, The Westin Times Square, New York, NY
November 30, 2017, The Westin Times Square
All Upcoming Live Events
Infographics
With the mobile ecosystem becoming increasingly vulnerable to security threats, AdaptiveMobile has laid out some of the key considerations for the wireless community.
Hot Topics
Why Amazon May Be Cable's Biggest Threat
Mari Silbey, Senior Editor, Cable/Video, 9/22/2017
Could 5G Have Found Its Glass Ceiling?
Dan Jones, Mobile Editor, 9/20/2017
Can Fixed Wireless Fix Rural Broadband?
Mari Silbey, Senior Editor, Cable/Video, 9/25/2017
1 Million Pirate Set-Top Boxes Sold in the UK
Aditya Kishore, Practice Leader, Video Transformation, Telco Transformation, 9/20/2017
Comcast Shuts Down OTT Again
Mari Silbey, Senior Editor, Cable/Video, 9/19/2017
Animals with Phones
Live Digital Audio

Understanding the full experience of women in technology requires starting at the collegiate level (or sooner) and studying the technologies women are involved with, company cultures they're part of and personal experiences of individuals.

During this WiC radio show, we will talk with Nicole Engelbert, the director of Research & Analysis for Ovum Technology and a 23-year telecom industry veteran, about her experiences and perspectives on women in tech. Engelbert covers infrastructure, applications and industries for Ovum, but she is also involved in the research firm's higher education team and has helped colleges and universities globally leverage technology as a strategy for improving recruitment, retention and graduation performance.

She will share her unique insight into the collegiate level, where women pursuing engineering and STEM-related degrees is dwindling. Engelbert will also reveal new, original Ovum research on the topics of artificial intelligence, the Internet of Things, security and augmented reality, as well as discuss what each of those technologies might mean for women in our field. As always, we'll also leave plenty of time to answer all your questions live on the air and chat board.

Like Us on Facebook
Twitter Feed