Level 3: Shifting Gears, Harmoniously

October 5th, 2011 by · 7 Comments

Now that Level 3 Communications (NYSE:LVLT, news, filings) and Global Crossing are now one, the focus moves on to the integration in the US and to a lesser extent in Europe. On that subject, the company is quite consciously putting forth a very different public foot this time around.

Gone is the mechanistic itemization of anticipated synergies, and in its place is a promise of a harmonious customer experience. While the synergies are what the markets are looking for, Level 3 is taking the lessons of the last integration very much to heart. What lesson?  Synergies show up on the bottom line eventually whether you emphasize them or not, but customers and reputations are not nearly so durable.

You could hear that also in Jim Crowe’s presentation recently at the recent Goldman Sachs conference. Regarding how to track the company’s progress next year, he said to watch whether they maintain (or even expand) growth rates next year, not which synergies hit the books when.  Those savings are important, but continued growth is the measure of their success.

And other noises the company has been making also prefer to look toward the new things they can do rather than simply the money they can save. That’s not to say there aren’t going to be substantial layoffs and plenty of other stuff going on as part of the $300M in anticipated synergies. That will inevitably be part of the next 12-18 months and will affect some good folks.

It’s just that I think everyone is utterly sick of treading water. This merger takes both companies to a place where they should have the money to make investments they have had to eschew for a decade, and they’d like to get started today.  The one piece of that integration they do like to talk in more detail about is building fiber out to those Global Crossing customers – adding to and investing in the network.

Another bit of harmony Level 3 is putting out there is their new combined interactive network map, something I’ve been watching for. They’re using a Google Maps interface, with detail down to the metro level if you zoom, but not all the way down to the street and building letter. That’s a nice balance I think, and one that Level 3 has taken a while to find.

I find that the bigger the company, the less detail they offer on their actual physical assets. It’s just a matter of maintenance I think, it’s hard to keep the content current when you get too much of it. Level 3’s new public map gives enough to know what they have without having to publicize every building.

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Categories: Internet Backbones · Mergers and Acquisitions

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7 Comments So Far

  • AlB says:

    Rob – thanks for the map – one question; who is the owner of the red sub sea lines and also the orange sub sea lines; ie; trans Pacific, trans Atlantic and at South America or are there multi-owners rather than only LVLT and GLBC??

    • Rob Powell says:

      Global Crossing owned its own set of cables around South America, but they also have capacity on consortium cables in the region (Americas II, Maya I, Arcos I) for diversity. Much as Level 3 does in the Atlantic. The transpacific and trans-asian stuff is all leased of course.

  • fanfare says:

    As always Rob, many thanks for the diligence. On the Trans Pacific cable leases, who are we leasing from?

  • Skibare says:

    do U think LVLT can now raise prices globally into future contracts and stop the bleeding to the bottom lines ???

    • Rob Powell says:

      Err, no. It will take several years to fix the ‘bottom line’ in that context. Raising prices globally would actually hurt that schedule unless everyone else did.

  • AlB says:

    Rob – LVLT Newsroom release “Completes acquisition of Global Crossing” states that states they are “anchored by extensive owned fiber network on three continents in more than 45 countries as well as substantial undersea facilities”

    Which continents are these three – NA; Asia; Europe; SA; ??

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