Thursday, May 25, 2006

Level 3 to Focus on Metro and Content Business Segments

Level 3 Communications announced plans to expand its recently announced Metro Services business unit as well as the formation of a new Content Services business unit.

The Level 3 Metro Services business unit will combine Level 3's existing metro operations and those of the recently acquired Progress Telecom, with the operations of the pending acquisitions of ICG Communications Inc. and TelCove, Inc. As previously disclosed, the unit is expected to generate approximately $700-$750 million in revenue in 2007.

The Level 3 Metro Services business unit will focus on delivering a full set of services to customers who make bandwidth decisions on a local or regional basis, such as state and municipal governments, universities, enterprise customers and regional wholesale accounts that operate in certain local or regional geographies.

Company veteran Kevin Dundon will lead the Level 3 Metro Services business unit, reporting directly to O'Hara.

Before the pending acquisitions of TelCove and ICG Communications and the recently completed acquisition of Progress Telecom, Level 3 already had extensive metro infrastructure in 36 markets, connecting to approximately 900 traffic aggregation points. The acquisition of Progress and, after close, of TelCove and ICG Communications will increase the number of traffic aggregation points to approximately 5,000 in the U.S. and approximately 5,200 globally.

The Level 3 Content Services business unit will be led by current Level 3 executive Brady Rafuse. Rafuse will continue to report directly to O'Hara.

The Level 3 Content Services business unit will target customers in the content segment who have bandwidth intensive applications, including video distribution, application hosting and gaming. Targeted customers will include search and portal companies, video sharing and social networks, sports leagues, television networks and channels, gamers and applications hosters.

Level 3's Vyvx subsidiary, which offers fiber-optic and satellite video delivery and advertising distribution, will become part of the Content Services unit.

  • Earlier this month, Level 3 Communications agreed to acquire TelCove, Inc., a privately held, facilities-based network operator, for $1.2375 billion in stock and cash. TelCove's network has over 22,000 local and long haul route miles serving 70 markets across the eastern United States, with approximately 4,000 buildings on net. The company has annual revenues of about $390 million. TelCove also holds over 300 LMDS and 39 GHz licenses covering 90% of the U.S. population.

See also