Telecom consolidation continues, with Level 3 (LVLT) announcing plans to buy TW Telecom (TWTC) in a $5.7 billion cash and stock deal that will give Level 3 a deeper fiber presence in many U.S. cities. Level 3 is paying $40.86 per share for TW Telecom. Both firms are based in Colorado, and together they will be an $8 billion (revenue) company.
Internet backbone providers like Level 3 and TW Telecom are feeling the heat as their larger rivals continue to grow. AT&T is trying to buy DirecTV, and Comcast wants to purchase Time Warner. Executives from both Level 3 and TW Telecom said that size and scale were key motivators for their merger.
TW Telecom was created in 1993 as a joint venture of Time Warner and US West, and went public in 1999. The company has focused on in-building fiber solutions for businesses, carriers and the government agencies.
Level 3 has a more global focus, serving customers in 60 countries. Its fiber network spans three continents and is connected beneath the surface of the ocean. The company offers wholesale connectivity as well as customer-specific solutions. The latter business is thought to be more profitable, but also more competitive.
Although Level 3 competes with AT&T and Verizon Communications in the enterprise market, it also counts carriers as customers on the wireless side. Its Tower Access program is designed to allow tower operators to locate on or near Level 3’s network facilities and is also used to provide backhaul for wireless carriers.
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Level 3 to buy TW Telecom in $5.7 billion deal
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