It’s Official: CenturyLink Acquires Qwest

By Josh Long Comments
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CenturyLink Inc. on Friday announced completing the acquisition of Denver-based Qwest Communications in a merger that it said creates the third largest telecommunications provider in the nation with operations in 37 states.

The merger was completed about two weeks after AT&T revealed a controversial agreement to acquire T-Mobile USA for $39 billion, potentially furthering consolidating power among the nation’s largest telecommunications companies.  

Last week CenturyLink and Qwest obtained the final regulatory approval to merge in a deal that Dow Jones recently valued at $22 billion. Under the terms of the CenturyLink/Qwest merger, Qwest stockholders will receive 0.1664 shares of CenturyLink common stock for each share of Qwest common stock they owned at closing, plus cash paid in lieu of fractional shares.

The Federal Communications Commission also recently approved the merger and imposed certain enforceable conditions to which the companies agreed.

CenturyLink is now one of the biggest telecom providers in the nation. 

The combined company of CenturyLink and Qwest generated 2010 revenues of $18.6 billion on a pro forma basis.  And based on the companies’ financials as of December 31, 2010, CenturyLink will serve 5.3 million broadband customers, 15.4 million access lines, 1.628 million video subscribers and 1 million wireless customers. 

“The addition of Qwest brings a strong enterprise business service offering to CenturyLink," Moody’s Investor’s Services, the debt ratings agency, stated today in a note upgrading some of Qwest’s ratings and changing its outlook for CenturyLink to stable from negative. 

Moody’s added that CenturyLink’s enterprise revenues will increase to nearly 40 percent of total revenues, compared to less than 25 percent prior to the merger.

Traditional telecommunications providers like CenturyLink face increasing pressure to adapt in the face of regulatory changes and telephone line losses to alternative technologies like Internet-based phone service and wireless.

“The long term viability of wire line only carriers relies upon their ability to transform from regulated, voice-centric businesses to de-regulated broadband focused providers," Moody’s stated. “Carriers like CenturyLink will continue to lose subscribers to wireless substitution and competition from cable providers."

Despite the merger, Qwest will continue to have a large presence in the Mile High City.

Although CenturyLink’s headquarters will continue to be based in Monroe, La., Qwest’s headquarters in Denver will remain one of the company’s six regional headquarters. CenturyLink also will maintain the headquarters of its Business Markets Group in the Denver metropolitan area. The other regional headquarters will be located in Apopka, Fla., Phoenix, Minneapolis, Seattle and Wake Forest, N.C.

Qwest CEO Edward Mueller will join CenturyLink’s board of directors. 

The merger was good for him personally. The Denver Business Journal recently reported that Mueller will earn $40 million between his 2010 compensation and 2010 stock awards triggered by the combination of CenturyLink and Qwest.

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