Boo! If you think mergers and acquisitions are scary, than two huge companies have a special Halloween morning treat for you: CenturyLink and Level 3 announced this morning that the former is acquiring the latter for $34 billion.
The merger is huge in internet-land, but not for the service you can sign up for at home. That’s the territory of “last mile” providers. And while CenturyLink does provide home and business service, in the same way as Charter, Comcast, and Verizon FiOS do, the deal is largely not about that.
The real impact is farther up the chain. Both CenturyLink and Level 3 are big “tier 1” networks, basically a vital part of the internet backbone in the U.S., connecting networks to other networks quickly and reliably.
This merger, then, further consolidates CenturyLink’s status as one of the biggest, most important internet-supporting companies in the country, keeping it competitive with AT&T and Verizon, among others.
In short, it’s all about the fiber: CenturyLink gets about 200,000 miles’ worth of network from the deal.
“The digital economy relies on broadband connectivity, and together with Level 3 we will have one of the most robust fiber network and high-speed data services companies in the world,” CenturyLink CEO Glen Post said in his statement. “This transaction furthers our commitment to providing our customers with the network to improve their lives and strengthen their businesses. It is this focus on providing fiber connectivity that will continue to distinguish CenturyLink from our competitors.”
Post, naturally, also lauded the benefits for shareholders from “significant synergies,” “financial flexibility,” and “strong cash flow,” because that’s what business is for and what investors want to hear.
by Kate Cox via Consumerist