CenturyLink (NYSE: CTL) could be a possible suitor for tw telecom (Nasdaq: TWTC), a profitable competitive provider serving the business services market which may be putting itself up for sale.
What's prompted these rumors is a Denver Post article citing a report in DealReporter where unnamed sources said the two service providers have been talking about a deal for a number of weeks.
Neither tw telecom nor CenturyLink would comment on this rumor, however. Over the past three years, CenturyLink has been aggressive on the acquisition front, acquiring not only Sprint's former wireline business unit Embarq, but also cloud and data center provider Savvis and Qwest Communications.
Three elements make tw telecom a possible attractive target to CenturyLink, which became the third largest telco following AT&T (NYSE: T) and Verizon (NYSE: VZ) after purchasing Qwest Communications last year: a deep set of business customers, a large fiber footprint and profitability--unlike a number of other CLECs, tw telecom is actually profitable.
The company has a broad market reach into 75 markets and over 28,000 fiber route miles--75 percent of which are in the metro. In addition, tw telecom has 16,000 on-net buildings connected to its fiber network, a factor that would immediately enable CenturyLink to expand the reach of its own growing Ethernet footprint and cloud services reach through its Savvis unit.
Driven by sales of Ethernet and IP/VPN services, tw telecom reported that total revenues in Q2 2012 grew 1.6 percent sequentially over Q1 2012 and 7.7 percent year over year.
Besides CenturyLink, the DealReporter report said Level 3, a service provider that completed an acquisition of the former Global Crossing, also expressed interest in tw telecom, but apparently did not agree with what the CLEC wanted for its business.
For more:
- The Denver Post has this article
Special report: Wireline in the second quarter of 2012
Related articles:
tw telecom Q2 revenues rise 7.7% on strong Ethernet, IP VPN sales
tw telecom sets stage for network service automation
tw telecom serves up new Ethernet interconnection product
tw telecom Q1 2012 revenue grew 7.9% on Ethernet, IP/VPN sales