Menu
Level 3 to acquire TW Telecom to add scale to business-focused networks

Level 3 to acquire TW Telecom to add scale to business-focused networks

The $5.7 billion deal is expected to close in four to six months, company officials said

When Level 3 Communications completes its US$5.7 billion deal to acquire TW Telecom, the company will be a stronger competitor, focused on large business and government customers, executives from both companies said.

The deal, announced Monday morning, gives Level 3 -- a global voice, data, video and Internet backbone provider -- a larger metropolitan footprint in North America, where TW Telecom services are focused, said Jeff Storey, Level 3's CEO.

The two companies' networks have only about a 10 percent overlap, with fiber network footprints that generally don't serve the same buildings even when both companies have networks in the same metropolitan areas, Storey said during a conference call.

Level 3's customers will benefit from TW Telecom's "deep metropolitan footprint and buildings connected to the network," resulting in faster and more reliable fixed broadband connections in the U.S., the company said. TW Telecom's customers will be able to take advantage of Level 3's backbone networks and data centers in more than 60 countries as well as global subsea networks, it said.

"The combination strengthens our position as a global communications provider, and enhances our ability to gain market share," Storey said. "We found our customers increasingly have global communications needs, whether it's to connect to their employees around the world, connect to their suppliers or connect to their customers."

The deal, expected to close in four to six months, also will allow the combined company to compete in a consolidating telecom industry, officials from both companies said. In February, Comcast announced plans to buy fellow cable and broadband provider Time Warner Cable, once TW Telecom's parent company, in a deal worth $45.2 billion.

Storey noted that cable broadband providers are among Level 3's main competitors.

"We're in a scale business," Storey said. "We know that our primary competitors are very large companies, whether they're incumbent telecos or cable companies. We pay attention to the competitive landscape."

TW Telecom's board embraced the acquisition because "the world is changing," said Larissa Herda, the company's CEO. "Enterprises have rapidly changing network needs, and as a result, the telecom industry is changing as well."

Changes in the telecom industry are "creating a wave of opportunity that's happening right now," she added. The deal will help the combined company expand, offer more services, and compete with larger telecom carriers, she said.

The combined company's customer base would be about 70 percent enterprise businesses, Level 3 said.

Level 3 expects about $2.2 billion in savings through synergies resulting from the acquisition. The combined company will have $7.9 billion in annual revenue, compared to $6.3 billion for Level 3.

The deal is subject to approval by the U.S. Federal Communications Commission, the U.S. Department of Justice and state regulators.

Level 3 CFO Sunit Patel said he doesn't expect any regulatory hiccups. "This should be reasonably straightforward, compared to other transactions that the regulatory authorities might be looking at, at this point in time," he said.

(Mikael Ricknäs in London contributed to this report.)

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's email address is grant_gross@idg.com.


Follow Us

Join the New Zealand Reseller News newsletter!

Error: Please check your email address.

Tags business issuestelecommunicationJeff StoreyTime Warner CableTW TelecomcomcastLevel 3 CommunicationsSunit PatelLarissa HerdaMergers and acquisitions

Featured

Slideshows

Sizing up the NZ security spectrum - Where's the channel sweet spot?

Sizing up the NZ security spectrum - Where's the channel sweet spot?

From new extortion schemes, outside threats and rising cyber attacks, the art of securing the enterprise has seldom been so complex or challenging. With distance no longer a viable defence, Kiwi businesses are fighting to stay ahead of the security curve. In total, 28 per cent of local businesses faced a cyber attack last year, with the number in New Zealand set to rise in 2017. Yet amidst the sensationalism, media headlines and ongoing high profile breaches, confusion floods the channel, as partners seek strategic methods to combat rising sophistication from attackers. In sizing up the security spectrum, this Reseller News roundtable - in association with F5 Networks, Kaspersky Lab, Tech Data, Sophos and SonicWall - assessed where the channel sweet spot is within the New Zealand channel. Photos by Maria Stefina.

Sizing up the NZ security spectrum - Where's the channel sweet spot?
Kiwi channel comes together for another round of After Hours

Kiwi channel comes together for another round of After Hours

The channel came together for another round of After Hours, with a bumper crowd of distributors, vendors and partners descending on The Jefferson in Auckland. Photos by Maria Stefina.​

Kiwi channel comes together for another round of After Hours
Consegna comes to town with AWS cloud offerings launch in Auckland

Consegna comes to town with AWS cloud offerings launch in Auckland

Emerging start-up Consegna has officially launched its cloud offerings in the New Zealand market, through a kick-off event held at Seafarers Building in Auckland.​ Founded in June 2016, the Auckland-based business is backed by AWS and supported by a global team of cloud specialists, leveraging global managed services partnerships with Rackspace locally.

Consegna comes to town with AWS cloud offerings launch in Auckland
Show Comments