Level 3, CenturyLink on Verge of Merger

CenturyLink and Level 3 Communications are negotiating a merger; if the two agree to a deal, it could be consummated as early as next week.

Brian Santo, Senior editor, Test & Measurement / Components, Light Reading

October 27, 2016

2 Min Read
Level 3, CenturyLink on Verge of Merger

CenturyLink and Level 3 Communications are reportedly negotiating another big US communications industry merger that could be settled as early as next week.

The merger talks between CenturyLink Inc. (NYSE: CTL) and Level 3 Communications Inc. (NYSE: LVLT) were first reported by The Wall Street Journal, which cited several unnamed sources. if completed, the merger would create a huge telecom provider worth more than $50 billion, including debt.

The deal would create a bit of an odd duck -- a company that caters largely to enterprise and government customers that also has a big but far from dominant residential business.

Centurylink's oldest antecedent is a local mom and pop telco established in Oak Ridge, LA, but the modern version of the company started to take form in the late 60s and early 70s. That's when it took the name Century Telephone and embarked on decades' worth of relatively small acquisitions that culminated with two blockbuster deals -- the purchases of Embarq in 2008 and Qwest in 2010. In terms of residential service, those deals vaulted CenturyLink into third place on the list of largest telcos in the US, right behind AT&T and Verizon.

But in 2011, the company began to target the enterprise market in earnest, with the acquisition of cloud provider Saavis, followed by the purchase of Tier 3, an infrastructure-as-a-service (IaaS) specialist that also boasted some cloud management expertise.

Level 3, meanwhile, built itself into one of the bigger communications companies serving enterprise and government customers through a pair of key acquisitions. It bought Global Crossing in 2011 for just under $2 billion, and followed that with the purchase of TW Telecom for $5.7 billion in 2014.

The company now operates some of the most well-used autonomous systems (AS) that comprise the Internet, reaching most of the US along with parts of western Europe, South America and Asia. The company also has a content delivery network (CDN) it purchased a decade ago.

As of Thursday evening, after the stock prices of both companies got a boost on the news, Centurylink had a market cap of roughly $16.8 billion, and Level 3 of $18.6 billion.

— Brian Santo, Senior Editor, Components, T&M, Light Reading

About the Author(s)

Brian Santo

Senior editor, Test & Measurement / Components, Light Reading

Santo joined Light Reading on September 14, 2015, with a mission to turn the test & measurement and components sectors upside down and then see what falls out, photograph the debris and then write about it in a manner befitting his vast experience. That experience includes more than nine years at video and broadband industry publication CED, where he was editor-in-chief until May 2015. He previously worked as an analyst at SNL Kagan, as Technology Editor of Cable World and held various editorial roles at Electronic Engineering Times, IEEE Spectrum and Electronic News. Santo has also made and sold bedroom furniture, which is not directly relevant to his role at Light Reading but which has already earned him the nickname 'Cribmaster.'

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