In a move to compete with AT&T and Verizon Wireless, CenturyTel is acquiring Qwest in a $10.5 billion stock swap. The companies expect the transaction to generate synergies of about $625 million over the next three to five years.
The merger will double the size of CenturyTel and give the telecom industry a company with more strength in the enterprise market. Qwest Business serves 95 percent of Fortune 500 companies and is one of the three universal service providers for Networx, the largest communications-services contract in the world.
“We believe the combination of CenturyTel’s and Qwest’s employees, assets and service areas will provide us greater scale, scope and expertise, and will provide significant benefits for shareholders, customers and our communities,” said Glen F. Post III, CenturyTel’s CEO and president. “This combination will 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.”
Welcome To the Big Leagues
The merger creates a company with national breadth and local depth. Combined, the companies serve local markets in 37 states with about five million broadband customers, 17 million access lines, 1,415,000 video subscribers, and 850,000 wireless consumers.
“The combined company’s highly recognized national network will significantly expand our ability to deliver strategic and customized product and service solutions to our business, wholesale and government customers throughout the country,” Post said. “In addition, we will still maintain the focus on our local markets through our effective regional operating model and targeted marketing strategies.”
CenturyTel expects the merger to drive cost savings through reduction of corporate overhead, elimination of duplicate functions and systems, and increased operational efficiencies. The transaction also is expected to generate annual capital-expenditure synergies of approximately $50 million within the first two years.
Thinking Big
“Qwest is a small company….