CenturyTel to purchase Qwest Communications
Denver-based Qwest Communications, the third-largest local phone service provider in the country, is getting acquired by CenturyTel, a smaller rural operator, in a $10.6 billion stock swap announced today.The deal ends months of speculation about the future of Qwest, one of the largest and most visible employers in Colorado. The company has struggled in recent years with landline losses as customers replace home phone lines with cellphones or Internet phone service.The combined company will be based in Monroe, La., where CenturyTel is headquartered, and will have about 17 million phone lines and 5 million broadband customers in 37 states. The move continues a string of high-profile corporate headquarters losses for the Denver area, which include Frontier Airlines and the Coors Brewing Co.Denver will continue to house key Qwest operations, including the regional headquarters of the company business markets group, one of the its primary divisions.Senior management will consist largely of CenturyTel officials.The deal, which requires regulatory approval, is expected to close during the first half of 2011.The name of the combined company will be determined prior to the close of the deal. CenturyTel began operating as CenturyLink after it merged last year with rural phone operator Embarq.Qwest has just less than 8,000 employees in Colorado and CenturyLink has a little more than 100 employees in the state.Layoffs are expected as the companies merge operations. In 2009, Qwest cut 2,800 jobs, or 8 percent of its workforce.”This merger seems to make sense,” said independent telecom analyst Jeff Kagan. CenturyTel “seems to be growing into a solid and large competitive force in the space.”Neither Qwest nor CenturyTel operate their own wireless networks, which have been cash cows for Verizon and AT&T as cellphones have become ubiquitous. Qwest and CenturyTel say they have about 850,000 wireless subscribers through reseller agreements.Under terms of the deal, Qwest shareholders will receive the $6.02 worth of CenturyLink stock for each Qwest share, a 15 percent premium over Qwest’s closing price of $5.24 Wednesday. CenturyLink shareholders are expected to own 50.5 percent and Qwest shareholders 49.5 percent of the combined company.Including the assumption of $11.8 billion in debt, the deal values Qwest at about $22 billion, the companies said.CenturyTel chief executive Glen Post will lead the new company. Qwest Ed Mueller will join the combined company’s board of directors”With Qwest, we will have a larger, national presence,” Post said in a conference call today.Mueller said the deal marks a “new milestone” for the industry.The companies’ board of directors have approved the deal.