CenturyLink, Level 3 Reportedly Discussing Merger; Analyst Sees Synergies
CenturyLink "is in advanced talks" to combine with Level 3, with a deal announcement possible "in the coming weeks," The Wall Street Journal reported Thursday. Both companies declined to comment to us on the report. "While we don't know if…
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true, it looks like CTL [CenturyLink] would be the buyer," Wells Fargo analyst Jennifer Fritzsche wrote investors. "A LVLT [Level 3] merger or purchase could make sense for a telecom carrier looking to deepen its fiber presence both inside and outside of its network. CTL does not have wireless and it has a less robust fiber footprint than some of its peers. We believe CTL is motivated to be aggressive with its fiber push to keep up with the competition. The addition of LVLT helps it do this." The deal could create "significant cost synergies and revenue synergy opportunities," Fritzsche wrote, citing special access (business data services), since CenturyLink is a net seller and Level 3 a net payer of such services. She suggested CenturyLink would have to pay a "significant premium" to combine with Level 3, which could attract interest from others such as "cable and content" companies. BDS rules are tentatively set for a Nov. 17 FCC member vote (see 1610270054).