DataCenterNews Asia logo
Specialist data center news for Asia
Story image

CenturyLink & Level 3: Is it a good deal for CenturyLink?

By Shannon Williams
Thu 3 Nov 2016
FYI, this story is more than a year old

CenturyLink plans to buy Level 3 Communications for around $24 billion using a mix of cash and stock as well as take on Level 3’s debt of nearly $11 billion. If regulators approve the deal, which TBR believes is likely, it would bring together two of the world’s largest network operators that provide ICT services to enterprise and government. CenturyLink shareholders would own 51% of the merged entity, while Level 3 shareholders would own the remaining 49%. The merged entity’s headquarters would remain in Monroe, La., with substantial resources in Colorado. Both companies expect the deal to close in 3Q17.

Why CenturyLink wants Level 3

Key reasons CenturyLink wants to acquire Level 3:

· To realize annual operating synergies of $975 million, mostly from back-office rationalization

· To significantly increase exposure to the enterprise segment, an area expected to grow as network traffic from cloud, digital media and Internet of Things (IoT) ramps up

· To better monetize its cloud assets, which have been underperforming as the market consolidates around Amazon Web Services (AWS), Microsoft and Google

· To enhance geographic diversification across 60 countries

· To increase strategic services’ share of combined company revenue to 65%

· To substantially reduce its tax burden over the next few years and boost cash flow via a $10 billion net operating loss carryover

· To gain end-to-end control for managing performance latency

On a net basis, this deal is about not only levering up on the enterprise side of the market for growth but also protecting investments in fiber and cloud and providing more robust market offerings that can better compete against AT&T, Verizon and cloud companies.

Regulatory implications CenturyLink is increasingly marginalized by Tier 1 telecom operators such as AT&T and Verizon as well as cloud operators such as AWS, Microsoft and Google, resulting in lower revenue and profit. For these reasons, TBR believes the U.S. government will approve the merger with minimal concessions because, though the merger would further concentrate the telecom market, it would create a larger and more competitive entity that could better compete against larger rivals in the market.

Capex implications Though CenturyLink could execute the Level 3 transaction, its finances would be further strained, which would pressure the company to realize operating synergies and obtain capex efficiencies as fast as possible. Though TBR expects net capex would decrease beginning in the first year from deal completion, it is unlikely there would be a substantial reduction because CenturyLink would have to keep up with growth in network traffic.

Telecom industry implications The market for enterprise ICT services has become a battleground over the past few years as leading operators align themselves with network traffic growth from cloud, digital media and IoT, much of which is generated by enterprises. With Level 3, CenturyLink would control one of the largest, most pervasive network backbones in the world, connecting the continents and providing critical backhaul across many key countries. CenturyLink would be able to plug this backbone into its fiber footprint and cloud ecosystem to provide seamless and secure high-bandwidth connectivity services to enterprises not only in the U.S. but also across 60 other countries.

Is this a good deal for CenturyLink? Though TBR believes CenturyLink would pay a substantial premium for Level 3, the deal has merits, especially from an accounting standpoint. The deal would enable CenturyLink to protect its dividend as well as continue investing at a similar capital intensity ratio. It would also allow CenturyLink to safeguard its cloud investments and drive international expansion more aggressively than the company was able to before. Lastly, the addition of Level 3 would increase CenturyLink’s exposure to strategic enterprise services, which is expected to be a growing area as companies scale up in cloud, digital media and IoT.

Article by Chris Antlitz, Senior Analyst at TBR

Related stories
Top stories
Story image
Migration
SNP unveils next generation of CrystalBridge software platform
Data is a key pillar of every customer-centric organisation, as it relies on agile decisions to become increasingly sustainable and intelligent.
Story image
Cybersecurity
Zscaler launches co-located data centres in Canberra and Auckland
The investment will offer public and private sector enterprises greater resilience in support of their zero trust cybersecurity posture.
Story image
Hybrid Cloud
HPE GreenLake advances hybrid cloud experience with new services
"The innovations unveiled today further build on our vision to provide the market with an unmatched platform to spur innovation and drive transformation.”
Story image
Public Cloud
Public cloud services revenues top $400 billion in 2021
"For the next several years, leading cloud providers will play a critical role in helping enterprises navigate the current storms of disruption."
Story image
Cloud
Cisco Live showcases new offerings in its first hybrid event
Cisco Live 2022 has seen Cisco executives and customers take the stage to present a range of discussions in the company’s first-ever hybrid event.
Story image
Sustainability
Legrand unveils Nexpand, a data center cabinet platform
Legrand has unveiled a new data center cabinet platform, Nexpand, to offer the necessary scalability and future-proof architecture for digital transformation.
Story image
Cloud
SnapLogic improves Intelligent Integration Platform
SnapLogic has released new features and improvements to its Intelligent Integration Platform, which will allow IT, data and business teams to make select processes faster and more straightforward.
Story image
Sustainability
SoftIron named global leader for efficient DC infrastructure solutions
SoftIron has been named a global leader for supplying energy-efficient data infrastructure solutions for core-to-edge data centers after an assessment by Earth Capital Ltd.
Story image
Sustainability
Huawei unveils next-generation sustainable data centers
Huawei says its next-generation data centers will be powered by PowerPOD 3.0, which reduces the footprint by 40% and cuts the energy consumption by 70%.
Story image
Sisense
Data and analytics could be key to higher selling prices in APAC
Sisense's latest report has found that almost half of data professionals in APAC think customised data and analytics can create better selling prices for their products.
Story image
Secure access service edge / SASE
Cisco unveils new cloud-managed networking offerings
Cisco has announced new cloud management capabilities that offer a unified experience across the Cisco Meraki, Cisco Catalyst and Cisco Nexus portfolios.
Story image
Infrastructure
Oracle Cloud Infrastructure expands distributed cloud services
“Distributed cloud is the next evolution of cloud computing, and provides customers with more flexibility and control in how they deploy cloud resources."
Story image
Amazon Web Services / AWS
Qualtrics goes live on AWS Cloud Infrastructure in Japan
Organisations across Japan will now be able to access the Qualtrics XM/OS platform locally via data centre in the AWS Asia Pacific (Tokyo) region.
Story image
Partnerships
Thailand announces launch of the Thailand 5G Alliance
It will promote collaboration between the public and private sector, through companies such as Huawei, to commercially drive Thailand's 5G development.
Story image
Healthcare
SnapLogic launches Accelerator for Amazon HealthLake
SnapLogic has launched Accelerator to allow healthcare and life sciences organisations to turn raw data into healthcare-related insights and actions.
Story image
Digital Transformation
The Huawei APAC conference kicks off with digital transformation
More than 1500 people from across APAC have gathered for the Huawei APAC Digital Innovation Congress to explore the future of digital innovation.
Story image
Expansion
Colt Technology expands into South Korea data center market
Colt Technology Services has expanded its network into the South Korean market, offering the country’s businesses cost-effective, low latency connectivity.
Story image
Colocation
Digital Edge chooses Nortek’s StatePoint for new data center
Digital Edge will use Nortek's StatePoint liquid cooling technology in its new data center, the first commercial colocation operator in Asia to do so.
Story image
Broadband
Singapore found to have the speediest internet rates in the world
New research from BanklessTimes has shown that Singapore has the highest recorded median internet speed in the world at 207.61 MBPS.
Story image
Sydney
Equinix and PGIM Real Estate open data centre in Sydney
Equinix and PGIM Real Estate, the real estate investment and financing arm of PGIM, have announced the first xScale data centre in Sydney, named SY9x.
Story image
Employment
Tech job moves - Forcepoint, Malwarebytes, SolarWinds & VMware
We round up all job appointments from May 13-20, 2022, in one place to keep you updated with the latest from across the tech industries.
Story image
Sustainability
Daikin and SP Group to build new energy efficient district cooling system
The project, set to be complete by 2025, will create a system with a cooling capacity of up to 36,000 refrigerant tonnes (RT). 
Story image
Microsoft
SAS Viya on Microsoft Azure to deliver 204% return - study
The Forrester Total Economic Impact study finds SAS Viya on Microsoft Azure brings a 204% return on investment over three years.
Story image
Cloud
QuSecure partners with DataBridge Sites to showcase platform
QuSecure has partnered with DataBridge Sites to showcase its Quantum-as-a-Service (QaaS) orchestration platform, QuProtect.
Story image
Cybersecurity
Kaspersky opens three new centers to boost data management
Cybersecurity company Kaspersky has opened three new Transparency Centers, one in Japan, the second in Singapore and the third in the United States.
Story image
Cloud
Boomi surpasses 20,000 customers. Sets record for the iPaaS space
Boomi has announced it has surpassed the 20,000 customer mark, setting the record for the largest customer base among iPaaS vendors.
Story image
Sustainability
Aligned Data Centers increases sustainability-linked loan
Aligned Data Centers has increased its sustainability-linked loan from $375 million to $1.75 billion to speed up the next phase of its strategic growth.
Story image
CASB
Juniper expands SASE offering with data loss prevention capabilities
Juniper has announced the expansion of its SASE offering with the addition of cloud access security broker (CASB) and data loss prevention (DLP) capabilities.
Story image
Infosys
Preparing for the digital decade with the right workforce strategies
For a decade that started under the pall of the pandemic, the 2020s is poised to end with a bang with the digital economy swelling to a high across the world.
Story image
Sustainability
AirTrunk boosts Japan presence with West Tokyo data center
AirTrunk is planning to build TOK2, a new hyperscale data center in Japan which will strengthen the company’s presence in the country.
Story image
Sustainability
Evolution Data Centres reveals target of 20 tonnes of CO2 per GWh
Evolution Data Centres launches their new Sustainable Data Centre Charter, which includes targets like only 20 tonnes of carbon emissions per GWh by 2030.
Story image
Vietnam
Viettel IDC deploys Cloudian Hyperstore object storage for enhanced cloud solutions
Cloudian has announced that its Hyperstore object storage has been deployed by Vietnam telco Viettel IDC, citing the technology’s flexibility, multi-tenancy and ransomware protection as significant advantages.
Story image
Sustainability
RDA and MVGX partner for sustainable data center development
Red Dot Analytics (RDA) and MetaVerse Green Exchange (MVGX) have entered a strategic partnership to make Singapore's data center development and operations more sustainable.
Story image
Robotic Process Automation / RPA
Micro Focus unveils Data Center Automation for SaaS delivery
MicroFocus has released Data Center Automation (DCA) for software-as-a-service (SaaS) delivery, offering more cost-effective vulnerability risk and IT compliance management.
Story image
Cloud
Talend introduces new data health solutions for businesses
Talend has announced its latest version of Talend Data Fabric, with the release of Talend Trust Score enabling data teams to establish a foundation for data health.
Story image
Sustainability
Intel unveils new investments for data center sustainability
Intel has announced two new investments, continuing its efforts to create more sustainable data center technology.
Story image
Infrastructure
SolarWinds IT Trends Report highlights increased cloud complexity for businesses
SolarWinds' new IT Trends report has signalled a significant shift in the way businesses are dealing with hybrid cloud and infrastructure.
Story image
Microsoft
Microsoft, Cloudian partnership offers data center flexibility
Cloudian’s HyperStore object storage platform is now integrated and validated to work with Microsoft SQ Server 2022, offering more flexible and scalable data centers.
Story image
Cybersecurity
Secureworks researches new threat to Elasticsearch databases
Researchers from Secureworks' Counter Threat Unit have identified indexes of multiple internet-facing Elasticsearch databases replaced with a ransom note.
Story image
Infrastructure
Global investment in data centers more than doubled in 2021
DLA Piper's latest global survey finds the total investment in data center infrastructure worldwide rose from USD $24.4 billion in 2020 to USD $53.8 billion in 2021.
Story image
Cloud
Vertiv introduces line of redundant power transfer switches
Vertiv has introduced Vertiv Geist Rack Transfer Switch (RTS), a new line of transfer switches that provides redundant power to single-corded devices.
Story image
Artificial Intelligence
Databricks announces new offering for Unity Catalog
Databricks has significantly expanded data governance capabilities on the lakehouse by unveiling data lineage for Unity Catalog.
Story image
Cloud
Cloudflare outage in 19 data centers worldwide due to own error
Cloudflare says its outage for 19 of its data centers yesterday was because of a change in a long-running project to increase resilience in its busiest locations.
Story image
Data Science
Neo4j announces service delivery alliance with Deloitte
Neo4j has announced a service delivery alliance with Deloitte Consulting Southeast Asia for a range of services to customers within the region.