The Qwest for the deal of the CenturyLink


In the triple-play world of telco/MVPDs, a pair of companies is merging in a move that will make the surviving entity the third-largest local wireline telephone carrier in the field behind AT&T and Verizon, with 1.4M MVPD subscribers in the fold.

CenturyLink is the acquiring entity, getting Qwest Communications for $10.6B in stock and the assumption of $11.8B in debt, for a total valuation of $22.4B. In terms of existing stockholders, those of CenturyLink will own 50.5% of the merged entity, with Qwest stockholders owning the remaining 49.5%, a nearly even split.

The merged entity would have interests in landline and wireless phone service, internet access and video program distribution.

The merger is expected to allow the surviving entity to realize savings of $625M over the next three-to-five years due to operating and capital synergies.

CenturyLink President/CEO Glen F. Post III observed, “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. 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.”

Added Qwest Chairman/CEO Edward A. Mueller, “This transaction is compelling for our shareholders, who will benefit from an immediate premium for their shares, an increase of approximately 50 percent in the annual dividend, and the opportunity to participate in the upside potential of the combined company through their ownership of CenturyLink stock. 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.”