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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Categories: Fiber Networks · Government Regulations · Mergers and Acquisitions
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Agreed – the Cloud & Colo’s are the natural buyer. All that cash and a nice hard asset they can put to work over the long term.
Cable service providers like Charter or Comcast can’t be ruled out. They would benefit greatly from a national backbone. Also I wonder if Sprint might not have an interest. It would be a nice way for them to freshen up their backbone although I doubt they would use it to compete in the Enterprise space.
I don’t know where Charters Long Haul Network resides, but the Comcast Long Haul is already on level 3. I’m not sure that Comcast specifically would gain a whole lot.
My guess is they would gain fiber depth (I’m assuming they only have a couple of fibers on their current routes) to allow them to push into the Enterprise space with a robust wavelength service product. Plus I doubt they have fibers on every route that will be mandated by the DOJ. It’s not clear if CTL will need to divest of L3 or Q fiber routes or maybe both.
Carl queefer has been too quiet lately, where’s he been?
Anyone know where to find the actual list of 30 pairs? Asking for a friend
Does anybody know how many pairs there are?
Why would they sell to a customer unless it is the Government (who will screw it up)?
They’re being forced to if they want to be able to go forward with the acquisition.
I do agree that 24 strands is too few for this on most of their routes.
Funny that DOJ cares about immaterial duplicate metro assets in 3 small(est) markets. But not the combination of all non-RBOC Internet backbones. New CTL backbone will be compromised of the majority of US-based “bakers dozen” including L3, GX, WilTel, Qwest, Broadwing, etc. Is Zayo next ?