Level 3 Communications cleared two major decisions in its move to acquire tw telecom, announcing that both the FCC and the stockholders of both companies have approved its acquisition of the competitive provider.
During the tw telecom stockholder's meeting, 86.2 percent of the tw telecom shares outstanding were voted in favor of the adoption of the merger agreement between tw telecom and Level 3.
Likewise, at the Level 3 stockholders' meeting, 99.7 percent of the Level 3 shares voting at the meeting were voted in favor of the issuance of shares of Level 3 common stock to tw telecom stockholders in the acquisition. Also, 90.7 percent of the Level 3 shares of common stock outstanding were voted in favor of the proposal to approve the adoption of the Level 3 charter amendment that increases the number of authorized shares of Level 3 common stock.
In approving the deal, the FCC said that the merger will serve the public interest and drive more competition in the business market.
"Based on our analysis, we find that the transaction is likely to increase competition by resulting in a combined company with a larger network footprint and a strengthened ability to compete for business customers," the FCC wrote in a filing. "On balance, we find that any potential loss of competition that may occur as a result of the transaction is outweighed by the public interest benefits that will likely result from this increased competition. Accordingly, we find that the transaction serves the public interest and consent to the transfer."
This merger did not come without protest from other service providers like CenturyLink (NYSE: CTL), which argued that they should get access to Level 3 and other competitive providers' conduit because they no longer have a monopoly standing in the business services market.
"CenturyLink argues that the merged Level 3/TWT may control a larger share of the Ethernet services market than CenturyLink, and that, overall, the incumbent LECs are no longer monopoly providers for enterprise services and should have access to the facilities of competitive LECs in order to compete for customers," wrote the FCC. "CenturyLink argues that Level 3 should have a post-merger duty to provide CenturyLink and other incumbent LECs with access to entrance conduit at Level 3's on-net buildings in the same manner that the incumbent LECs are required to provide access to their facilities under section 251(b)(4) of the Act."
However, the FCC dismissed these claims, saying that under section 251(b)(4) of the 1996 Telecom Act, "which obligates a LEC to afford access to rights-of-way 'on rates, terms, and conditions that are consistent with section 224' does not grant incumbent LECs the reciprocal right to gain access to the facilities of a competitive LEC."
Level 3 will also report its third-quarter 2014 earnings on Nov 5. The service provider said it expects to close the tw telecom acquisition before Nov. 5 if they meet the customary closing conditions and will discuss third-quarter 2014 earnings results for both Level 3 and tw telecom during the call.
For more:
- see the release
- and this FCC filing (.pdf)
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