CenturyLink (NYSE: CTL) has cleared another hurdle to move forward with its acquisition of Qwest (NYSE: Q) by gaining U.S. antitrust approval of the deal.
Although the $10.6 billion transformational deal still needs the approval of the FCC and Qwest's shareholders, the deal, when complete, will transform CenturyLink--which is still in the process of integrating the former Embarq into its fold--into an even larger ILEC. Upon completion, the combined CenturyLink/Qwest will have local service presence in 37 states, about five million broadband customers, 17 million access lines, and 1,415,000 video subscribers.
While the consolidation of the Tier 2 telco service provider market is inevitable, it really only begun in earnest in recent years beginning with the former CenturyTel's acquisition of Embarq and more recently Frontier's recently completed acquisition of Verizon's rural lines.
The driver behind the Tier 2 telco consolidation trend is simply an attempt by these wireline-centric operators to stay competitive. Unlike their larger RBOC colleagues, namely AT&T (NYSE: T) and Verizon (NYSE:VZ), CenturyLink and Qwest don't have the luxury of a relying on a wireless business to offset wireline landline loss. By consolidating their assets, Tier 2 operators will be able to more effectively compete for the consumer and business service dollar.
For more:
- Reuters has this article
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