The U.S. Department of Justice has given CenturyLink and Level 3 Communications the green light for their merger, but not without some pretty significant conditions. The combined company will be divesting a substantial pile of fiber assets to pass regulatory muster.
On the metro fiber front, they will be divesting the Level 3 metro network assets in Albuquerque, Boise, and Tucson. All three are not exactly Level 3's biggest metro markets, but they aren't particularly big metro markets for anyone but CenturyLink. The combined company will keep the customers who want to stay, and possibly lease capacity in the divested assets to do it where necessary.
But the bigger divestment is in the intercity fiber department. The combined company will have to divest an IRU for 24 strands of dark fiber connecting 30 city pairs nationwide. We haven't really seen that sort of asset hit the market in a long while. The list of buyers could be quite interesting and very long.
Big consolidators like Zayo, Crown Castle, Uniti Group, Windstream, and even GTT are each fairly light on intercity fiber at least somewhere in or adjacent to their footprints. Any number of big content and cloud providers could easily find a use for that much fiber, so you can't leave Google, Microsoft, Facebook, or Amazon off the list. Various private equity groups would certainly take a look at it as well. You might even see an international interest, whether it be someone like Teliasonera or NTT or Altice. And of course with 5G looming, there are always Verizon and AT&T if they decide it's worth it. But it's rather unclear what any potential buyer would have to pay for the IRU at this stage.
Regardless, CenturyLink and Level 3 have cleared one more hurdle on their year-long journey toward this merger. They have nearly all the regulatory approvals they need, although California is still missing from the list. They still anticipate the actual closing by mid to late October.
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