Level 3 and tw telecom chose Halloween 2014 to complete the deal they struck back in June. It’s a done deal, and now the integration begins in earnest.
At least this probably won’t be as big of a disruption to folks in terms of layoffs as in the past. It’s unlike past deals by Level 3 which were so often about putting the same revenues on a lower cost infrastructure and combined workforce as the company tried to grow into its debt. Genuity, Wiltel, Broadwing, and Global Crossing aren’t the template for the tw telecom integration.
This is the first deal by Level 3 that they didn’t need to do for desperately needed scale, but rather for growth opportunities. Hence, while there will certainly be some headcount reductions on the administrative side, the integration focus will be on a) not screwing up things that are already working, and b) getting more out of the assets than either could have individually.
Whether they can pull that off or not is next year’s story, or should I say ‘Storey’ haha. The new Level 3 now has fiber into some 30,000 on-net buildings and towers, and few weak spots anywhere in the US in their metro fiber coverage of Tier 1 and 2 markets. Some may match the breadth of their reach, and others have more depth in some places, but nobody has both – incumbents included. If they get it right, strong organic growth should ensue. But it will be a big job, one which we won’t see the real fruits of until 2016 rolls around even if they succeed.
Level 3 is likely to be quiet for a while on M&A in the US, there’s just no prize out there that’s worth potentially screwing up the integration task they face. The only possibilities are therefore overseas, either in Europe or South America. I still think Colt is the best fit, especially in light of the tw telecom deal.
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