CenturyLink will consider other metro fiber, data center acquisitions

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CenturyLink (NYSE: CTL) may have not done any transformational deals in 2013 like Savvis and Qwest, but that doesn't mean it is ruling out other purchases that could complement its revenue mix.

Two potential acquisition targets could include data center and metro fiber providers. 

"We continue to look, but our main focus is on areas where it will help us continue to get to revenue stability, which are metro fiber networks or data centers or data center capacity, both of which we could do a really good job with through our capital budget today," said Stewart Ewing, EVP and CFO of CenturyLink, during the Citi Internet Medi a & Telecommunications Conference.

So what about buying other traditional telcos that could enhance its reach?

Ewing said that while they would consider acquiring other telcos only if they could be comfortable that "the synergies are there and did not impede our ability to get to revenue stability and revenue growth."

It has been actively purchasing assets to complement its growing cloud and managed service businesses.

The service provider purchased Seattle-based Tier 3 to enhance its cloud app development capabilities in November, for example. By using Tier 3's public, multi-tenant cloud, the new CenturyLink Cloud offer includes a self-service interface to create and manage public cloud environments. 

Having these expanded cloud service capabilities will enable it to cross sell cloud and data center services to its existing and new business customers.

"If you ask Savvis' President Jeff Von Deylen what his biggest opportunity is, it's really those thousands of business customers that we have that already trust us enough to buy network from us and the opportunity to sell them IT services over time," Ewing said. "About a third of the bookings in the third quarter came from customers that are also customers of CenturyLink from a network standpoint."

Now that it has a broader collection of network and service assets, CenturyLink will focus more of its attention on organic growth opportunities.

"We're confident in our ability to continue on our march to get to revenue and EBITDA stability," Ewing said. "Additionally, the $3 billion or so of capital expenditures we have each year puts us in a position to grow revenue by the investments we make not only in our network, but in our data center capabilities, the broadband speeds we provide to our customers, and the business customer connections we can add."

Speculation over what potential deals CenturyLink should not be that surprising given fellow ILEC Frontier's (Nasdaq: FTR) recent move to acquire AT&T's Connecticut assets in December for $2 billion.

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