CenturyLink in Advanced Talks to Merge With Level 3 Communications
October 27 2016 - 2:00PM
Dow Jones News
CenturyLink Inc. is in advanced talks to merge with Level 3
Communications Inc., a deal that would give the telecommunications
companies greater heft in a brutally competitive industry.
A deal could be announced in the coming weeks, according to
people familiar with the matter. As always, there is a possibility
the talks could fall apart.
Terms of the deal couldn't be learned. As of Thursday afternoon
before the Journal's report of the talks, Level 3, based in
Broomfield, Colo., had a market value of $16.8 billion.
CenturyLink, based in Monroe, La., was worth $15.2 billion.
Shares of Level 3 rose 6.1%, while CenturyLink shares jumped 14%
in midday trading after the Journal's report.
Level 3, which traditionally focused on so-called enterprise
customers, was one of the biggest telecom operators to survive the
dot-com bust. The company runs one of the largest internet
backbones in the world but has turned its focus increasingly to
small and midsize business in an attempt to reverse slowing sales
growth in its core business.
Year to date, the company's stock had fallen more than 14%
before the talks were reported. Singapore state investment firm
Temasek Holdings Pte. is Level 3's largest shareholder, with 18% of
its stock, according to FactSet. Level 3 is scheduled to report
third-quarter earnings next week.
CenturyLink, traditionally a rural local-phone service provider,
has sought to upgrade its network with fiber-optic lines in a bid
to compete with AT&T Inc., Verizon Communications Inc. and
rivals in the cable industry. The company has also branched into
hosting and cloud services though lately it has been looking to
sell some of its data centers. CenturyLink operates more than 55
data centers, according to its website.
The so-called wireline business of running telephone and
internet lines has suffered from brutal competition over the past
15 years, hurt by plummeting prices for network bandwidth and high
capital costs.
The possible deal also illustrates both companies' dwindling
acquisition opportunities in the sector after years of
consolidation.
Both companies have historically been acquisitive. In 2014,
Level 3 bought TW Telecom for about $6 billion. In 2011, it bought
rival Global Crossing Ltd. for around $2 billion.
CenturyLink, formerly called CenturyTel, has also been a
voracious acquirer. In 2011, it bought Qwest Communications
International for $11 billion and Savvis Inc. for about $2 billion,
two years after it purchased Embarq Corp. for about $6 billion.
Drew FitzGerald contributed to this article
Write to Dana Mattioli at dana.mattioli@wsj.com and Dana
Cimilluca at dana.cimilluca@wsj.com
(END) Dow Jones Newswires
October 27, 2016 13:45 ET (17:45 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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