On this side of the pond, CenturyLink isn’t a particularly well known carrier, but they’ve just made a bid for Level 3 Communications, known for their fiber network services.
This isn’t the first time the two have had dealings, in 2003, Level 3 sold a fiber network in the American Mid-West (MFON, Mid-West Fiber Optic Network) to then CenturyTel (it changed it’s name to CenturyLink once it had acquired Sprint/Nextel’s joint local telecoms division, spun off after their merger as Embarq, in 2009)
So what does yesterday’s announcement mean to both companies?
Whilst CenturyLink isn’t as well-known here, it did purchase Savvis, the hosting company, in 2011, and operates hosting centers across Europe and America, and with Level 3, the company increases that footprint.
It also gains an expanded fiber network, covering much of Europe and Asia, as well as the oceanic links to support the connections between continents, as well as customers, both on-net and off-net.
Financially, the CenturyLink can use Level 3 losses to offset against tax, and end up with a net positive cashflow, as well as synergy in operations costs from consolidation of assets. This is almost a merger of equals, with CenturyLink shareholders owning 51% of the combined environment, and Level 3 shareholders owning the balance.
For full details, you can read Business Insider’s take on the merger, as well as a copy of the news release.