CenturyLink and Level 3 have advanced in their merger talks as per the latest reports. If the merger is successful, it will be an enterprise telecom merger worth more than fifty billion dollars.
Corporate clients of both these firms seek more bandwidth and faster capabilities to move data, and this is the main reason for the merger talks. The deal would combine the enterprise services of Level 3 with the network of CenturyLink that offers internet and telephone to millions of their user base.
Analysts estimate that the market for the voice and data services for corporate customers is worth anywhere from fifty seven billion to a hundred billion dollars in revenue per year. Experts in telecommunications field say that the deal could be announced as soon as next week, but Level 3 Communications and CenturyLink declined to comment on the news.
The report was first published by Wall Street Journal last week, and WSJ reported that the deal would offer both the businesses improved heft in the competitive industry. The terms of the deal is not yet disclosed and before the report of the merger talks came, Level 3 had a market value of 16.8 billion dollars and CenturyLink Inc was worth 15.2 billion dollars.
CenturyLink Inc gets two-third of their total income from corporate users, whereas the revenue of Level 3 comes completely out of the business segment. Level 3 always focused on the enterprise customers and was one of the biggest telecom firms able to survive the dot-com bubble. They have one of biggest internet backbones in the world, but they are now increasingly focusing on small and midsize businesses to reverse slowing sales growth.
The stocks of Level 3 had fallen more than fourteen percent before the merger talks were reported by WSJ. The largest shareholder of Level 3 is Singapore state investment firm, Temasek Holdings Pte. Ltd and they hold eighteen percent of the shares. Level 3 is expected to report their third-quarter earnings this week.
CenturyLink is a rural local phone service provider and they are upgrading their network with fiber optic lines to compete with Verizon Communications, AT&T Inc, and other rivals in industry. They have also diversified their business into cloud services and hosting, though they tried to sell some of their datacenters. They operate more than fifty-five datacenters as per the data provided in their website.