CenturyLink Inc. and Level 3 Communications are currently discussing a possible merger, says people familiar with the transaction. None of the companies have talked to the press yet, but anonymous sources have revealed that the deal could involve $50 billion, including debts.
Both CenturyLink and Level 3 are struggling with the current market and some fierce competitors. If the acquisition takes place, CenturyLink network internet, and telephone services will be combined with Level 3 enterprise services. The deal could be announced next week, according to a source that spoke to Reuters.
Level 3 runs one of the largest internet business in the world, and it is currently investing in small and midsize businesses. The company has been through a slow sales growth and its intentions with small and medium-sized business is to incentivize sales. The Colorado-based company will report its third-quarter earnings next week, The Wall Street Journal reports.
CenturyLink is involved mainly in rural local phone services, and it is trying to compete with AT&T Inc., Verizon Communications Inc, and other rivals in the cable industry. CenturyLink wants to upgrade its network with fiber-optic lines to level up with competitors. The company is also exploring hosting and cloud services, but apparently, it is not working because CenturyLink is trying to sell some of its 50 data centers.
Rough times for CenturyLink and Level 3 could be avoided if the merger takes place
Both companies struggled to survive, and even one of them almost avoided bankruptcy. Level 3 had to overcome tough times in the early 2000s when it narrowly avoided bankruptcy. Year to date, the company’s shares had fallen more than 14 percent, but the rumors of a possible merger stopped the decrease of the shares’ value.
CenturyLink has not stopped fighting with rivals over the past 15 years. And the business of running telephone and internet lines has also suffered from incredible low prices and high capital costs.
The merger between CenturyLink and Level 3 will give the companies a real chance to stay in the market, but until the acquisition deal remains unofficial, both businesses will continue to struggle in the competitive tech market.