CenturyLink, Qwest merger consolidates more of the landline market

With its $22.4 billion stock bid to acquire Qwest Communications (NYSE: Q), CenturyLink (NYSE: CTL) snaps up of the last remaining independent remnants of the former Bell System.

The deal comes barely a year after the former CenturyTel and EMBARQ combined to form CenturyLink.

As a stock-for-stock deal, Qwest shareholders will get 0.1664 CenturyLink shares for each share of Qwest common stock they own at closing. When the deal wraps, CenturyLink shareholders will own about 50.5 percent and Qwest shareholders will own 49.5 percent of the combined company.

A combined CenturyLink/Qwest will create a communications powerhouse with an even bigger set of communications assets. When combined, the two service providers have a combined 173,000-mile fiber network, local service presence in 37 states, about five million broadband customers, 17 million access lines, 1,415,000 video subscribers and 850,000 wireless consumers.

"We believe the combination of CenturyLink's and Qwest's employees, assets and service areas will provide us greater scale, scope and expertise and will provide significant benefits for shareholders, customers and our communities," Glen F. Post III, CenturyLink's chief executive officer and president, said in a release. When the deal is completed, Post will become CEO of the combined company.

Heralded as one of the largest telecom deals in years, Qwest can now finally put rumors to rest about its future. Last year, rumors emerged that Qwest was shopping its long haul network to other service providers. But after a number of reports emerged that Qwest wanted too much for the assets, the rumors quickly died.

Given CenturyLink's success in integrating the former EMBARQ into its fold, some analysts believe CenturyLink was inevitable. "CenturyLink's proposed acquisition of Qwest isn't completely surprising--in fact, some were predicting this deal late last year, and CenturyLink's CEO has said that the company would look for acquisition opportunities once it moved further along in its efforts to integrate the assets from its last purchase, Embarq," said Ed Gubbins, Senior Analyst, New Paradigm Resources Group. "Scale is very important in this business; it drives much of the M&A activity in the space, and it will continue to do so."

For more:
- see the release here
- Wall Street Journal has this article

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