Qwest Merging with CenturyLink

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| Peter Radizeski of RAD-INFO, Inc. talking telecom, Cloud, VoIP, CLEC, and The Channel.

Qwest Merging with CenturyLink

News reports this morning from NYTimesBusinesWeek and MarketWatch have CenturyLink merging with Qwest in an all stock deal. Huh?!

"The firms say the deal values Qwest at $22.4 billion, including $11.8 billion of assumed debt." [MW]

"The combination creates a national, 173,000-mile fiber network, the firms said. As of Dec. 31, CenturyLink and Qwest served local markets in 37 states with approximately 5 million broadband customers, 17 million access lines, 1.4 million video subscribers and 850,000 wireless consumers." [MW]

Will the FTC and FCC go for this?

Bankers are not long term thinkers. They are playing casino games with our money. This is a casino game. See here from this statement:

"The companies expect CenturyLink's free cash flow per share, excluding integration costs, to rise immediately following the close of the transaction. The transaction is expected to generate annual operating and capital synergies of approximately $625 million when fully recognized over a three- to five-year period following the close of the transaction."

When has any telco integration gone smooth? The only synergy is from firing a ton of folks, cutting benefits and pensions.

In Wall Street math, you slam together two bad assets with some TARP money and everything comes out great in two quarters. I guess, telco is learning the new math. Take declining revenue companies like CTEL, Embarq and Qwest, slam them together and you get something like Fairpoint for the customers.

According to NYT, it's CenturyTel leading the charge: "CenturyTel said Thursday that it would acquire Qwest Communications in a $10.6 billion stock-swap that would combine the two landline and Internet service providers and count as one of biggest telecommunications deals in years." CenturyTel is still digesting Embarq!

I love this line: "Glen F. Post III, CenturyLink's chief, said the scale attained through the deal would "enhance our ability to deploy innovative IP products and high-bandwidth services to business customers, expand broadband availability and speed to consumers, and offer superior, differentiated video products."" Really? Because most mega-mergers result in a big mess, especially for customers.



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