Cisco acquires Acacia Communication

Network gear maker Cisco Systems Inc. said it would buy optical component maker Acacia Communications Inc. for $2.84 Billion in cash, as it seeks to garner a bigger chunk of 5G spending by telecom companies.

Globally, mobile networks would need higher-capacity optical interfaces to handle a surge of data when high-speed the fifth-generation network comes online in the next few years. The acquisition will bolster Cisco's technology for service providers upgrading to 5G and put its optical portfolio ahead of the shift toward using plug and play devices across various communication segments.

According to Cisco's Visual Networking Index, global internet traffic is projected to more than triple to 13.2 exabytes per day in 2022 from 4.1 exabytes per day in 2017. "Cisco's optical portfolio was mainly for short-range data center connections, and now gains Acacia's skill set in areas such as metro, long-haul, and undersea.

Revenue in Cisco's infrastructure platform business, which includes switches and routers, rose 5% to $7.55 billion in its third quarter. That business is expected to get a boost from 5G communication networks. The deal is Cisco's biggest since its $3.7 billion purchase of business performance monitoring software company AppDynamics in 2017.

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.