Sizing up the deal:
CenturyLink (NYSE: CTL) is in the process of acquiring RBOC Qwest Communications (NYSE: Q) for $22.4 billion in stock. Well on its way to integrating the former EMBARQ into its fold, the pending acquisition of Qwest is not only CenturyLink's biggest deal yet, but also marks the end of Qwest as one of the last remaining three original RBOCs created during the divestiture of the legacy AT&T (NYSE: T).
When the deal is complete, CenturyLink ... will become a major U.S. national service provider
Why is the deal significant?
When the deal is complete, after gaining necessary regulatory approvals including the FCC, CenturyLink--once nothing more than a smaller rural phone operator--will become a major U.S. national service provider with a very large set of local, metro and long-distance network assets.
Interestingly, CenturyLink's bid for Qwest finally put the lid on rumors that emerged in late 2009 that Qwest was shopping its long haul network to other service providers.
From a network infrastructure perspective, the combined CenturyLink/Qwest will boast a 173,000-mile fiber network, local service presence in 37 states, about five million broadband customers, and 17 million traditional voice access lines.
From a fiber network perspective, CenturyLink gains a three-pronged network set that serves consumers via its ongoing Fiber to the Node (FTTN), but also metro and long-haul assets that's used to deliver a set of high-speed Ethernet and TDM-based services to retail and wholesale services to SMBs, enterprises and service providers, including wireless operators.
Not only will CenturyLink benefit from the assets, but also its multi-purpose, or what Qwest's CTO called a "smart build" approach to building out its respective fiber networks.
Take Qwest's approach to fiber-to-the-cell sites. As it has continued to drive fiber into more wireless towers, Joseph Euteneuer, Qwest Communications' executive vice president and chief financial officer, said during the Wells Fargo Securities 2010 Technology, Media and Telecom Conference in November, "when we're building fiber to the cell site, we're looking to the left and right to see where homes and businesses are."
As a result of that coordinated fiber build strategy, Qwest was able to add 100,000 new homes to its FTTN network.
Although it will take time to assess whether or not CenturyLink will adopt Qwest's approach, it will have a solid platform to build from as it integrates the assets into one larger service provider.