CenturyLink & Qwest: Creating a Telecom Giant
Regulators in Washington State have given the nod to the acquisition of Qwest Communications by CenturyLink – two of the largest telecommunication companies in the United States. Listed on the New York Stock Exchange (NYSE:CTL) and a member of the S&P500 index, CenturyLink is set to become the third-largest telecommunications company in the country upon the successful conclusion of the buyout – AT&T being the largest, followed by Verizon.
The merged companies hope to meet the ever-changing telecommunication needs of consumers who are moving toward wireless, internet and cable, and away from landline services. The combined company will have more than 17 million access lines, over 5 million broadband customers, and up to 1.4 million video subscribers. The restructured company will operate from CenturyLink’s current location in Monroe, Louisiana, with subscribers spread across thirty-seven states. Qwest, which is also listed on the New York Stock Exchange (NYSA:Q), is currently headquartered in Denver, Colorado.
The proposed deal was announced in April of 2010, and the parties involved are aiming for the completion of the deal by April 1, 2011. In a stock-for-stock transaction, each Qwest share would be swopped for 0.1664 of CenturyLink’s shares. With approval having been received from Washington State regulators, the Federal Communications Commission is expected to sign off its approval of the deal in this month. One of the requirements of the deal, as stipulated by the Washington Utilities and Transportation Commission, is that Qwest and CenturyLink pledge, over the next five years, to invest a minimum of $80 million in establishing broadband networks across Washington State.
Some of the highlights of the transaction, as stated on the CenturyLink Qwest Merger website include the fact that the combined company will offer a 180,000 route mile fiber network allowing it the national breadth, along with the local depth, to provide an array of broadband products and services. These services will include high speed internet, data hosting, video entertainment, managed services and fiber to cell tower connectivity. Furthermore, the transaction is expected to produce annual operating cost synergies estimated at $575 million, anticipated to be fully realized within three to five years of closing. Also, the transaction is expected to generate annual capital expenditure synergies of around $50 million within two years of the deal’s conclusion. An essential element of the acquisition of Qwest by CenturyLink is the creation of a dependable employee base, focused on customer satisfaction, and committed to providing quality service.