Competitive local exchange carrier CenturyLink is close to finalizing a deal to purchase Level 3 Communications in a deal that could solidify their stance in the business communications and large enterprise market, according to several reports.
The Wall Street Journal reported Oct. 27 that the two were close to hammering out a deal, which could be announced in the coming weeks. Later, Reuters reported that a deal would value the combined companies at about $50 billion.
Stocks in both companies rose on news of the possible deal. Level 3 shares soared 15% from $46.92 each on Oct. 26 to $54.06 on Oct. 28. CenturyLink’s increase was less dramatic – its shares rose 7.6% from $28.25 on Oct, 26 to $30.39 on Oct. 28.
Monroe. La.-based CenturyLink primarily offers phone service, has about 55 data centers and has also dabbled in the pay TV business with its Prism TV service. Prism TV had about 311,000 customers in the second quarter. The company has also been conducting a pilot for a skinny bundle over-the-top service called Prism Stream, which may benefit from a Level 3 connection.
The Level 3 deal would come on the heels of planned layoffs at the telecom company. In September CenturyLink said it would shed about 8% of its workforce – about 3,500 people – in an effort to cut costs. At the time the company said it was approaching the layoffs on a voluntary basis and hoped to be finished by Dec. 16.
Level 3 gets most of its revenue from the enterprise and business services business, an area that makes up about two-thirds of CenturyLink’s sales, according to reports. Bloomfield, Colo.-based Level 3 is one of the biggest Internet Service Providers in the world but has been shifting its focus toward small and mid-sized businesses of late, according to reports.