Service providers CenturyLink and Level 3 Communications reportedly are in merger talks in a deal that would create a larger and more competitive telecommunications company.
Citing anonymous sources, the Wall Street Journal and Reuters both reported that executives with the two companies are negotiating a deal that would being Level 3 into the CenturyLink fold. The sources told Reuters that an acquisition would be worth more than $50 billion and that it could be announced as early as next week.
Wall Street Journal sources said a deal could be made public within the next few weeks. Officials with both CenturyLink and Level 3 have declined to comment on the reports.
Telcos are under increasing pressure to deliver more speed and capacity to customers that are struggling to manage and store more and to analyze the massive amount of data that is being generated in this age of the cloud, more mobility and the internet of things (IoT).
Neither CenturyLink nor Level 3 has been shy about buying other companies to build out their own capabilities. CenturyLink in 2011 bought service providers Savvis and Qwest Communications International, the latter a $12.2 billion deal that made CenturyLink the country’s fourth-largest carrier. The company also has bought such companies as AppFog and Tier 3, and earlier this year, the company acquired cloud application management service ElasticBox.
For its part, Level 3 two years ago bought TW Telecom in an effort to build out its enterprise communications portfolio. At the time, Level 3 officials said the combined company had a value of $27 billion. In the past, Level 3 has bought a range of other companies, including Global Crossing, WilTel Communications, Looking Glass Networks and ICG Communications.
In the second quarter this year, Level 3 saw revenue hit $2.05 billion and net income of $149 million. For its part, CenturyLink revenue in the second quarter came in at $4.4 billion, with net income hitting $196 million.