CenturyLink (CTL) is buying Level 3 Communications (LVLT), the two companies confirmed this morning. The deal is valued at $19 billion to $34 billion, based on multiple conflicting media reports. The combined companies will leverage CenturyLink’s enterprise footprint and Level 3’s global reach into more than 60 countries. The company will also invest in the “reach and speeds” of its broadband infrastructure for small businesses and consumers, CenturyLink said.
Speculation about the deal emerged last week. The move reinforces CenturyLink’s aggressive shift toward network-centric services rather than cloud services. CenturyLink has been striving to sell its cloud data centers for about a year. A deal to sell those data centers has been expected this quarter, but this morning’s CenturyLink-Level 3 announcement did not mention the status of those efforts.
The combined CenturyLink-Level 3 company will have $19 billion in pro forma business revenue and $13 billion in strategic business revenue, the duo said. Together, CenturyLink’s and Level 3’s revenue will be 76 percent derived from business customers, and 65 percent of the combined company’s core revenue will be from strategic services, the companies said.
According to CenturyLink:
“This transaction increases CenturyLink’s network by 200,000 route miles of fiber, which includes 64,000 route miles in 350 metropolitan areas and 33,000 subsea route miles connecting multiple continents. Accounting for those served by both companies, CenturyLink’s on-net buildings are expected to increase by nearly 75 percent to approximately 75,000, including 10,000 buildings in EMEA and Latin America. Overall, the complementary domestic and international networks will provide cost efficiencies by focusing capital investment on increasing capacity and extending the reach of the combined company’s high-bandwidth fiber network.”
After the close of the transaction, Glen Post will continue to serve as CEO and president and Sunit Patel, EVP and CFO of Level 3, will serve as Chief Financial Officer of the combined company.
A conference call about the deal is set for 8 a.m. ET today.