& 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
Download our complete guide to de-risking NFV deployment in 2016, including:
  • An eight-step strategy to deploying NFV safely, based on input from the companies that have already started virtualizing their production networks.
  • Interviews with leading executives at Colt, AT&T, Deutsche Telekom, Cisco, Nokia, ZTE, Ericsson and Heavy Reading.
  • Flash Poll
    Live Streaming Video
    Prepping for the Future: Upskill U Explained
    During this short kick-off video, Doug Webster, Vice President of Service Provider Marketing, Cisco, and Light Reading’s CEO & Founder Steve Saunders give an overview of Upskill U.
    Telecom Innovators Video Showcase
    Atrinet's NetACE – Migration to NFV & SDN With NetOps-Driven LSO

    5|4|16   |     |   (0) comments


    At Atrinet's headquarters, Ray Le Maistre sits down with Roy Silon to get an in-depth look into the company's focus and the secret recipe for their success.
    LRTV Huawei Video Resource Center
    Amsterdam ArenA, Powered by Huawei

    5|4|16   |     |   (0) comments


    Huawei's ICT solutions power the state-of-the-art Amsterdam ArenA, turning it into a smart stadium.
    LRTV Interviews
    Testing When There's No 'There' There

    5|4|16   |     |   (0) comments


    The benefits of SDN/NFV are well known, but the transition comes with some challenges, prominent among them is: how do you test a network that has been abstracted and has the potential to be endlessly reconfigurable? Light Reading was at NFV World Congress in Santa Clara, Calif., where we bumped into Mats Nordlund, CEO and co-founder of Netrounds, a Swedish ...
    LRTV Interviews
    Ditching the Slash & the Orchestration Wars

    5|3|16   |     |   (2) comments


    SDN and NFV have been inextricably bound with each other for so long that on a conceptual level, smooshing them together into one catch-all phrase – SDNFV – is now justifiable, according to Dan Pitt, executive director of the Open Networking Foundation (ONF). Light Reading spoke to Pitt at the NFV World Congress, where he explained that the next ...
    LRTV Custom TV
    ZTE TV Connect Highlights

    5|3|16   |     |   (0) comments


    ZTE gives us a tour of its booth and new products at TV Connect in London.
    LRTV Custom TV
    Deluxe's Unified Delivery Solution

    5|3|16   |     |   (0) comments


    Join Alan Breznick of Light Reading and visit the Deluxe booth at NAB! Here you'll find Deluxe's Unified Delivery Solution, OTT video, virtual reality, HDR, 4K and much more!
    LRTV Interviews
    Verizon Puts Gray Boxes in the Shade

    5|2|16   |   04:33   |   (1) comment


    When it comes to the white box trend, "gray" boxes, which have a slight proprietary twist, don't give service providers and end users the advantages they're seeking, according to Verizon's Vice President of Product and New Business Innovation Shawn Hakl.
    LRTV Custom TV
    Dealing With a Disrupted Video Market

    5|2|16   |     |   (0) comments


    Ericsson's Simon Frost discusses how traditional pay-TV providers can cope with the big changes wrought by the rise of OTT video and IP technology.
    LRTV Custom TV
    The VNF Responsibility of Red Hat

    5|2|16   |     |   (0) comments


    At MWC, Caroline Chappell of Heavy Reading visits the Red Hat booth and sits down with Chris Wright to talk about the responsibility the VNF needs to take on in order to ensure the operators get the carrier-grade performance they expect for their network.
    LRTV Interviews
    AT&T Expert on the Key Pillars of UC

    4|29|16   |   03:58   |   (0) comments


    Vishy Gopalakrishnan, AVP of product marketing at AT&T, talks about the three developments that are making unified communications and collaboration secure and reliable for enterprise users.
    LRTV Documentaries
    LRTV Report: Mobile Core Innovation

    4|28|16   |   25:32   |   (0) comments


    Hear from multiple industry experts from Deutsche Telekom, SK Telecom, Heavy Reading, Huawei, Cisco, Ericsson, Nokia, NEC and many more about developments in the mobile core as operators virtualize their IMS and evolved packet core systems and prepare for a 5G world.
    LRTV Huawei Video Resource Center
    NFV World Congress Highlight

    4|26|16   |     |   (0) comments


    The highlight of the NFV World Congress contains exciting telecom news. Join us for an inside look at Huawei's ICT 2020 plan and its latest collaboration with industry leaders.
    Upcoming Live Events
    May 23, 2016, Austin, TX
    May 23, 2016, Austin Convention Center
    May 24-25, 2016, Austin Convention Center, Austin, TX
    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
    WiCipedia: Woman Cards & Bitch Switches
    Sarah Thomas, Director, Women in Comms, 4/29/2016
    Amazon AWS Reports $2.6B Quarterly Revenue, Up a Colossal 64%
    Mitch Wagner, West Coast Bureau Chief, Light Reading, 4/28/2016
    Sprint CEO: Our Spectrum Is for 5G
    Dan Jones, Mobile Editor, 5/3/2016
    Amazon & Other 'Big 4' Cloud Providers Crushing Competitors
    Mitch Wagner, West Coast Bureau Chief, Light Reading, 4/29/2016
    FCC Poised to Re-Regulate Wholesale Access
    Carol Wilson, Editor-at-large, 4/28/2016
    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
    Sloth Mail Click Here
    Sloth mail -- somehow even slower than snail mail.
    Live Digital Audio

    Of all the tech companies in the Valley, Intel has made the most aggressive commitment to building a diverse and inclusive workplace culture. It's doing so by taking concrete, measurable steps, making a large financial investment and through a commitment to complete transparency about its progress. In this radio show, WiC Director Sarah Thomas will be joined by Shlomit Weiss, Intel's Vice President, Data Center Group, and General Manager of Networking Engineering, who will share with us why Intel is tackling this huge challenge, how and to what effect. She will also discuss her unique experiences leading development of Client SOC development in the past and today leading development of all of the chipmaker's silicon hardware for networking IPs and discrete devices and managing a team of 600 engineers across Israel, Europe and the US.