The global communications company CenturyLink announced this Monday a deal to buy the competing Level 3 Communications for an estimated $34 billion. The merger will consolidate the position of the joint company as one of the telecom powerhouses in the U.S.
The acquisition announcement follows the approval of new regulation for ISPs in the country by the FCC. The framework for broadband providers like CenturyLink now establishes that they must have customer consent before using or sharing their personal data.
The addition of Level 3 Communications’ infrastructure to that of CenturyLink will turn the joint company into the second largest communications provider after AT&T. AT&T, on the other hand, is about to get bigger than ever by acquiring Time Warner for more than double the sum of the CenturyLink-Level 3 Communications deal.
CenturyLink merger will result in domestic and global expansion
The agreement between CenturyLink’s board of directors and Level 3 Communications expands the outreach of the new company both in the United States and internationally.
“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,” said CenturyLink in its official press release.
The communications giant also stated that the combined company would see a 75% surge in on-net buildings in strategic locations, including Latin America, Europe, the Middle East, and Africa.
While CenturyLink has over 50 data centers in Asia, Europe, and North America, Level 3 Communications counts with a service platform presence in over 60 countries around the globe.
CenturyLink’s financial outlook is not as bright as it seems
By acquiring Level 3 Communications, CenturyLink agreed not only to a $24 billion cash-and-stock deal but also to an additional $10 billion sum of Level 3’s previous debts.
Upon learning the news later on Monday, the stock market reacted accordingly. CenturyLink’s shares fell about 12 points, bringing the value of the Level 3 deal down to $23 billion.
In contrast, Level 3 Communications’ stock rose 5% on Monday afternoon, but the market plunge of Century Link still affected investors of the company. Originally agreeing on $66.50 per Level 3 share, the stock drop brought down the final value to $64.46.
The joint statement of the companies, however, radiates enthusiasm even in the face of coming revenue fall and rising competition. CenturyLink and Level 3 Communications expect to close their merger deal around the third quarter of 2017, citing a ‘strong financial profile’ and growth opportunities in the future.