Monday, October 16, 2006

Level 3 to Acquire Broadwing, Furthering Consolidation

In a further sign of carrier consolidation in the US market, Level 3 Communications agreed to acquire Broadwing Corporation in a cash and stock deal valued at $1.4 billion. The deal would add to a series of acquisitions by Level 3 this year, including WilTel, Progress Telecom, ICG Communications, TelCove and Looking Glass Networks.

Broadwing, based in Austin, Texas, operates a 19,000 mile intercity fiber network over which it delivers data, voice and media solutions to enterprises and service. Approximately half of Broadwing's revenue comes from the wholesale market, with business customers comprising the remaining revenue.

Level 3 Communications operates a 23,000 mile fiber optic network over which it delivers wholesale and enterprise services, including Internet Protocol (IP) services, broadband transport, colocation services, and softswitch-based managed modem and voice services. S

"The acquisition of Broadwing is consistent with both the Level 3 wholesale market strategy as well as our more recent entry into the enterprise market," said James Q. Crowe, chief executive officer of Level 3. "We believe the combination of Level 3 and Broadwing will create value for our investors through the elimination of duplicative network and operating costs, the addition of a solid revenue base, and a further strengthening of our financial position.

"Broadwing has made great strides with national enterprise customers as a result of their strong product portfolio and national sales teams. This creates an exciting opportunity for us to leverage both of these capabilities to accelerate the growth of Level 3's Business Markets Group."http://www.level3.com

  • In June 2006, Level 3 Communications agreed to acquire Looking Glass Networks, Inc., a privately held facilities-based provider of metropolitan transport services, for $165 million. Looking Glass, based in Oak Brook, Illinois, provides data transport services including SONET/SDH, Wavelength and Ethernet as well as dark fiber and carrier-neutral colocation. Looking Glass' network includes approximately 2,000 route miles serving 14 major metro markets, with lit fiber connectivity to approximately 215 buildings. Looking Glass also has dark fiber connectivity to approximately 250 additional buildings.

  • In May 2006, 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.

  • In April 2006, Level 3 Communications acquired ICG Communications, Inc., a privately held Colorado-based telecommunications company, for $163 million in stock and cash. ICG primarily provided transport, IP and voice services to wireline and wireless carriers, Internet service providers and enterprise customers. ICG's network has over 2,000 metro and regional fiber miles in Colorado and Ohio and includes approximately 500 OPs. ICG served more than 1,600 customers.

  • In January 2006, Level 3 Communications acquired Progress Telecom, a regional wholesale network services company based in St. Petersburg, Florida, for $137 million, consisting of $68.5 million in unregistered shares of Level 3 Common Stock and $68.5 million in cash.
    The Progress Telecom network features diversely routed fiber, DWDM and SONET connecting nearly 200 POPs across the south-eastern U.S. The infrastructure includes over 8,524 route-miles of fiber and 29 metro networks.

  • In October 2005, Level 3 Communications agreed to acquire WilTel Communications in a cash and stock deal valued at $680 million. WilTel, which was based in Tulsa, Oklahoma, operated a fiber network that extended coast-to-coast with direct access in more than 700 locations.

  • In July 2006, Infinera named Broadwing as a customer for its DTN optical system, enabling the carrier to offer managed wavelength services to more cities in their nationwide network. In addition, Infinera licensed key Corvis intellectual property including Raman amplification, and took over manufacturing and maintenance support for Broadwing's CorWave network with members of the Corvis engineering, manufacturing, and support team becoming Infinera employees. Level 3 is another Infinera customer.

  • In July, Broadwing appointed Stephen E. Courter as its new CEO and member of its Board of Directors, replacing Dr. David Huber.

  • Broadwing first began deploying its nationwide, All-Optical Ultra-Long Haul Network in 2000.

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