Level 3 Buys Progress Telecom
Under the terms of the deal, Level 3 will pay $68.5 million in unregistered shares of its stock and $68.5 million in cash to Progress Energy and Odyssey Telecorp, the joint owners of Progress Telecom.
Level 3, which operates one of the nations largest IP-based fiber-optic networks, said it will not take over some assets of Progress Telecoms wireless tower attachment business, as well as some of the companys interests in marketing distributed antennae systems and providing tower services to other mobile carriers.
The company has also reserved the right to pay cash in lieu of providing common stock as part of the deal, which is expected to close some time during the second quarter of 2006.
Progress, which recorded 2005 sales of roughly $20 million, controls an estimated 9,000 miles of land line, including 29 metropolitan networks ranging from Miami to New York, along with 31 wireless switching hubs in the Southeast. The firm, which primarily serves regional wireless services carriers, also provides connections to international cable landings in Florida.
Level 3 officials said the deal will help their company expand its network presence in the Southeast and augment its $724 million buyout of rival WilTel Communications, which closed in December 2005.
"This transaction represents a unique opportunity to expand Level 3s footprint in the Southeastern region of the United States, where we have seen strong demand for our services," Kevin OHara, president of Level 3, said in a statement. "More importantly, we serve a number of the same large, key customers, particularly certain wireless and international customers."
A major element of Level 3s plans will be marketing international services to its newest carrier customers.
Through the two deals, Level 3 has significantly upgraded its presence in the region, as WilTel is based in Tulsa, Okla., controls roughly 3,000 miles of landline in the area, and counts AT&T among its largest customers.
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