Merger a Boon to CenturyLink Business?

The new president of CenturyLink Inc. (NYSE: CTL)'s Business Markets Group claims the Qwest-CenturyLink merger has gone so smoothly that the biggest thing business customers will notice "is the lack of something to notice."

Chris Ancell, who had been EVP of Qwest Business Markets Group, has the benefit of keeping his team in its existing Denver headquarters, while other former Qwest operations move to the Monroe, La., headquarters of CenturyLink. But Ancell is crediting his new boss, CenturyLink CEO Glen Post, with pushing the two companies to spend the last 11 months preparing to be an integrated company from day one of the merger, which closed April 1. (See CenturyLink-Qwest Expect April 1 Close.)

"We have done a lot of work over the last 11 months to define an organization, to define process, to make decisions about what the going-forward systems would look like," Ancell says. "Glen Post was very focused that, on day one, we will have a company that operates as a single entity."

That entity is divided into three parts: Ancell's Business Markets Group, which serves companies whose total telecom spend is $5,000 per month and up; CenturyLink Wholesale Markets Group, which is largely the old Qwest Wholesale operation; and CenturyLink Regional Markets, the grouping of six largely local operations. The latter includes residential customers, small businesses and mid-market companies spending $1,500 to $5,000 a month on telecom, that were once part of the Qwest Business Markets operation.

Denver remains home to a regional operation, as well as Ancell's group, but that hasn't stopped the local press from bemoaning the loss of one of the city's largest employers whose names -- first U.S. West and then Qwest -- adorned one of its largest buildings, in addition to holding naming rights to Seattle's football stadium and various other facilities in the 14-state local footprint, all of which now will bear the CenturyLink moniker.

Job cuts in common administration functions will hit Denver the hardest. That may be one reason why the general tone of commentary has been to question whether a company based in a small town in Louisiana, where it isn't even the local phone company, can improve the national status of the Qwest brand.

Ancell, unsurprisingly, says yes, but he has some facts to back that up. The new Qwest Business Markets now has major new local access facilities in 23 additional states to offer its business customers, and from which to solicit new business, he points out. That includes major new local fiber footprint in Florida, North Carolina, Ohio and Missouri.

"That addresses access and access always winds up being a key factor in any decision-making process," Ancell says. "That additional footprint can enhance the access we provide to existing customers, particularly large customers with geographic dispersion like financial services and retail operations."

Both CenturyLink and Qwest had focused in recent years on building an Ethernet portfolio, and while some rationalization of the service portfolio may be in order, Qwest can bring hosting, on-demand services (Ancell eschews the "cloud" designation) and on-net long-haul capabilities to CenturyLink's existing customer base, offering new sales options there.

"The other big opportunity that I see is the broadened scale of company as a financial entity in terms of top-line revenue and the cash it generates to be able to make the investment in some of the things we have talked about -- Ethernet, on-demand services, big bandwidth -- the opportunity to invest at the scale this company now carries," Ancell says.

For now, the existing indirect sales channels of each company will remain in tact, while an integration strategy is developed and the new CenturyLink will continue to work with its primary vendors -- Cisco Systems Inc. (Nasdaq: CSCO) and ShoreTel Inc. for Qwest and Avaya Inc. for CenturyLink -- expanding the options for customers, Ancell says.

— Carol Wilson, Chief Editor, Events, Light Reading