CenturyLink to buy Level 3 Communications

CenturyLink Inc. agreed to buy Level 3 Communications Inc. for about $34 Million in cash and stock, creating a more formidable competitor to AT&T Inc. in the market to handle heavy Internet traffic for businesses.

Both companies have amassed giant networks to haul internet traffic through deals over the years. Level 3 is one of the largest providers used by internet services including Netflix Inc. and Google to route traffic across the web, operations that would bolster CenturyLink core offerings to businesses. Level 3 was the second-biggest US provider of Ethernet services—running high-bandwidth internet connections for companies—in the first half of this year, trailing only AT&T, according to Vertical Systems Group Inc. CenturyLink was fifth on the list.

CenturyLink, which has been exploring the sale of its data center business, is one of the biggest phone companies in the US, formed after CenturyTel Inc. bought Embarq Corp. in 2009 and acquired Qwest Communications International Inc. two years later. Both companies have contended with growing competition from cable providers and other smaller rivals offering internet and phone connections for businesses. 

CenturyLink, which also offers residential landline phone and internet services in cities such as Phoenix and Seattle, gets about two-thirds of its revenue from business customers. The acquisition is one of the biggest telecommunications deals of the year. Level 3 had a market value of $19.4 billion and has about $11 billion in debt. CenturyLink was valued at about $16.6 billion and has about $19 billion in debt.