CenturyTel Buying Embarq!

October 27th, 2008 by · Leave a Comment

CenturyTel (CTL) is buying Embarq (EQ).  Apparently the M&A market in telecom isn't quite dead!  In this case though, it's a bit odd to think about CTL as the buyer since it is the smaller of the two.  Embarq's revenue hovers at $6.3B, whereas CenturyTel is in the $2.6B range.  Indeed, CenturyTel shareholders would own only 35% of the combined company if the merger does in fact happen.

And of course, that is because the merger is all stock.  The credit markets currently being closed for business, that's the only way one can do big deals right now.  Presumably CenturyTel will simply assume all of Embarq's debt and some administrative costs will be saved and voila we have a bigger RLEC. It's not as if there are many markets to integrate or anything.

But this deal may permanently bump Qwest out of the top tier of remaining RBOCs, given its current valuation will be far beneath this new entity.  All of which begs the question: does Qwest fit with these two?  Does a Qwest-CenturyTel-Embarq combination make sense down the line?  After all, if the rlec industry is consolidating to save costs, and AT&T and Verizon don't want Qwest, isn't that the logical destination for those assets?

If you haven't already, please take our Reader Survey! Just 3 questions to help us better understand who is reading Telecom Ramblings so we can serve you better!

Categories: Mergers and Acquisitions

Discuss this Post


Leave a Comment

You may Log In to post a comment, or fill in the form to post anonymously.





  • Ramblings’ Jobs

    Post a Job - Just $99/30days
  • Event Calendar