CenturyLink and Qwest to merge

Telecoms companies CenturyLink and Qwest have agreed to merge their businesses in a deal which values Qwest at $22.4 billion.  The merger will create the third largest fixed-line carrier in the US after AT&T and VerizonÔÇöboth of whom are focusing on their wireless services for growth. The combined company will serve local markets in 37 states with about five million broadband customers, 17 million wirelines and 850,000 wireless consumers. The merger is expected to result in synergies of about $625 million a year after three to five years. Currently, AT&T has 46.5 million wireline subscribers and Verizon Wireless has 32.6 million wireline subscribers. Glen F. Post III, CenturyLink's CEO and president, commented: "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. ÔÇ£In addition, we will still maintain the focus on our local markets through our effective regional operating model and targeted marketing strategies. We believe shareholders will benefit through their investment in a company that has greater financial resources and flexibility, including a more diversified revenue base and an enhanced competitive position." Edward A. Mueller, chairman and CEO of Denver, Colorado-based Qwest, said: ÔÇ£We look forward to becoming part of a larger company with a strong financial profile, an industry-leading local and national network, and a shared commitment to customers, employees, communities and shareholders. We also look forward to maintaining a key presence in Denver." The deal will move Monroe, Louisiana-based CenturyLink into the long-distance market and increase its presence in providing business telecoms services. Despite fixed-line operations feeling the strain as customers migrate to mobile phones, long-distance and business-related services are growing quickly. About a quarter of the two companiesÔÇÖ combined revenues will now come from these segments, compared to around 11 percent of CenturyLink's revenues currently. It is thought that the extra scale should also strengthen CenturyLink's ability to compete with cable TV operators in broadband and could help it expand in television. Telecoms companies have been pushing into areas such as broadband and internet telephony to compensate for their ailing fixed-line businesses. Qwest currently offers voice and internet services in 14 states, including Arizona, Idaho, Nebraska, Wyoming and Montana. The carrier has focused on building its high speed internet business to compensate for falling fixed-line demand. It had around three million high speed internet subscribers at the end of last year. CenturyLink is in the process of rebranding from CenturyTel after its $5.8 billion acquisition of rural carrier Embarq last year. Industry insiders have said they expect to see more consolidation among US rural carriers in the future. The corporate headquarters of the combined company will be located in Monroe, Louisiana. The company also will maintain a key operational presence in Denver, Colorado, including a regional headquarters and other functions to be determined.