CenturyLink Is Born

It’s official, the merger between Embarq and CenturyTel is complete, and the combined entity will start its new life as CenturyLink (NYSE:CTL, news, filings).  Of course the real re-branding work will come later, this is just at the corporate level – everyone else will still see CenturyTel and Embarq for a while.  The combined company will have 7.5M landlines, 440K video customers, and 2.1M broadband customers across a mostly rural footprint.  Those landlines will of course be declining steadily for the foreseeable future, but we should remember that copper may be obsolete but it is still a cash cow for ILECs.  Revenues will be on the order of $8B, and the company expects to be free cash flow positive in 2010.

Between now and then of course there will be lots of integration spending, so who knows.  Certainly there will be some headcount reductions over the next few quarters, as management tries to wring as many synergies as it can out of the merger.  The good news of course is that when ILECs merge there is little or no territorial overlap, and hence less layoffs tend to happen.

The general consensus is that more RLEC consolidation is guaranteed.  Might CenturyLink and Windstream be on the menu for New Year’s?

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Categories: ILECs, PTTs · Mergers and Acquisitions