Its official - Level 3 Communications is no more and has merged with CenturyLink making the combined company a significant player in global network services market “number two in the world in enterprise," said CenturyLink CTO Aamir Hussain.
Commenting on the news, Glen Post, CenturyLink’s chief executive officer, said: “CenturyLink is now poised to offer an expanded, robust portfolio of communications solutions focused on our customers’ networking and IT services needs. Our customers, from individual consumers to global enterprises, will benefit from our expanded, innovative network solutions, our complementary managed services and our highly talented workforce.”
After what has been a year in the making, the deal was littered with delays, negotiations and pending approvals but let’s look back at the timeline of events.
Back in October 2016, CenturyLink was rumoured to be interested in buying Level 3 with claims of the two in advanced conversations, later that month the rumours were confirmed with CenturyLink officially announcing its intentions to buy Level 3 for a cash and stock agreement worth approximately $34 billion.
In March 2017, Stewart Ewing CenturyLink’s CFO, confirmed that after the Level 3 takeover, the company is likely to reduce its capital expenditure significantly thanks to synergies. In an interview with Capacity, Hussain was quoted as saying there are approximately $1 billion worth of synergies “$125 million in capital expenditure and $800 million to $850 million in operational expenditure, most of which is coming from the network,” he said.
On the topic of company synergies, in an exclusive comment to Capacity, Richard Warley, regional president for Europe, Middle East and Africa (EMEA) at CenturyLink, said: “Driving operational efficiencies across our product portfolios is essential, but so is process simplification and automation. We will continue to drive toward our key operational initiatives and invest with discipline in our network and smart innovations that drive our business forward.”
Later that month, the merger was approved by the shareholders of both companies, with 96.3% of CenturyLink and 81.2% of Level 3’s shares voting in favour of the deal.
In May 2017, CenturyLink announced the first of many executive leadership positions for the new combined company. Laurinda Pang was named as of head CenturyLink’s operations in the Asia-Pacific, Europe, Middle East and Asia, and Latin America, following the company’s takeover of Level 3 Communications.
In June, the full executive leadership team was announced Glen Post was staying on as chief executive officer, Jeff Storey would act as president and chief operating officer, Edward Morche was named as head of strategic enterprise, federal government and state government, Maxine Moreau as president of consumer, Aamir Hussain as chief officer of technology product development and security operations and Clay Bailey as senior vice president of transformation and integration. As of today an exhaustive list of the senior management team can be found here.
By September, the deal was delayed due to pending approvals from the Federal Communications Commission, the US Justice Department, and the state of California. By the beginning of October the merger was approved by US Justice Department and the California Public Utilities Commission, by the end of the month the FCC had also followed suit.
The newly joined company already has a pro-forma revenue of $24 billion for the trailing twelve months ended 30 June 2017. It also predicts that 75% of its core revenue will come from business customers and nearly two-thirds of its core revenue will come from strategic services.
In terms of the transaction itself holders of Level 3 common stock will receive $26.50 per share in cash (without interest) and 1.4286 shares of CenturyLink stock for each Level 3 share they owned. CenturyLink shareholders now own approximately 51% and former Level 3 stockholders now own approximately 49% of the combined company.
In total CenturyLink will now connect more than 350 metropolitan areas with more than 100,000 fibre-enabled, on-net buildings, including 10,000 buildings in Europe, the Middle East, Africa and Latin America.
Overall the company says that it is able to offer a broader and more innovative product portfolio of network solutions and advanced IT services. It will also be able to deliver these expanded services to its enterprise, government, wholesale and consumer customers over a large-scale, fibre-rich global network. And of course due to its increased scale and assets, it can continue to invest in its broadband infrastructure for small businesses and consumers.
Looking ahead to the future of the new company, Warley said: “The new joint business is fundamentally stronger as we are bringing together two highly complementary businesses. We are now even more sophisticated, innovative and scalable at a local to global level, delivering solutions from Adaptive Networking to managed IT services. With the growth of the digital economy, CenturyLink will continue to be a trusted provider at the centre of customers’ digital transformation. Our business is about increasing the possibilities for customers and the service provider ecosystem here in EMEA, the region I am heading up, and globally.”
“Our goal is to be the world’s best networking provider and we have the ability to achieve this as one company. CenturyLink is focused on providing a differentiated experience for our customers, while driving profitable growth and increasing free cash flow per share. Our scale and experience will enable us to deliver on behalf of our customers, employees and our shareholders,” added Jeff Storey.
