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CenturyLink-Qwest Expects April 1 Completion Following FCC Blessing

Now that the FCC has approved, with conditions, CenturyLink's $12.2 billion merger with Qwest, the two companies expect to combine operations as of the beginning of next month.

It took nearly a year, and a state-by-state climb through the approval process, but CenturyLink and Qwest are closing in on the completion of their merger.

Following last Friday's long-sought approval by the Federal Communications Commission (FCC), CenturyLink stated that the two companies expect complete the merger and combine operations as of April 1.

According to a statement from CenturyLink, it volunteered to increase broadband service availability and preserve certain competitive rates, among other commitments made during its FCC review process.

CenturyLink did not provide additional specific details on those commitments, but according to a statement from the FCC, the company has agreed to offer qualifying low-income households broadband access starting at less than $10 per month and computers for less than $150 a month, and keep the window open to receive those rates for five years for qualifying customers. The FCC expects between 2 million and 2.3 million households to qualify for the benefits across the combined company's 37-state territory.

According to the FCC, CenturyLink is also on the hook to make "a significant annual commitment to marketing, outreach and digital literacy training, and include detailed reporting on outcomes and an independent analysis of [the broadband outreach program's] effectiveness."

"I'm particularly pleased that the program will include detailed reporting on outcomes and an independent analysis of the program's effectiveness, so that the Commission and others can understand what works and what doesn't in efforts to close the adoption gap," said Julius Genachowski, FCC Chairman, in a statement.

In addition, CenturyLink has agreed to increase the capacity of the Qwest network so that at least 4 million more homes and businesses and 20,000 "anchor institutions," such as schools and libraries, have broadband access with at least 4 Mbps actual download speed. The company must also more than double the number of homes and businesses than can receive 12 Mbps broadband and more than triple the number that can receive 40 Mbps broadband.

Among price protection conditions, CenturyLink, according to the FCC, has agreed to not increase enterprise service prices for 7 years in the few dozen buildings --located in Minneapolis and Olympia, Wash. -- where CenturyLink and Qwest currently compete.

CenturyLink and Qwest must also "ensure the merger does not harm interconnection agreements with competing phone carriers" and offer protection to wholesale customers' support systems and service quality.

The $12.2 billion merger of CenturyLink and Qwest Communications was first announced in April 2010, valued at about $10.6 billion at the time as a deal to combine the country's third- and fourth-largest traditional phone companies. When completed, Qwest and CenturyLink will boast some 173,000 miles of fiber network in the U.S., according to the vendors, and cover more than 17 million access lines and about 5 million broadband connections, about 1.4 million video subscribers and about 850,000 wireless customers.

Qwest will operate as a wholly-owned subsidiary of CenturyLink, and the new company will trade on the New York Stock Exchange under CenturyLink's current "CTL" symbol. CenturyLink shareholders will control 50.5 percent of the combined operations, with Qwest shareholders controlling 49.5 percent.

According to previous statements made by the companies, the combined entity's corporate headquarters will be at CenturyLink's headquarters in Monroe, La., though Qwest's Denver offices will be maintained as a regional headquarters for what will be named the Qwest Business Markets Group.

NEXT: The Long, Winding Road For Qwest-CenturyLink


As of March 18, the merger had received approval from 20 of the 22 states it needs, plus the District of Columbia, and CenturyLink and Qwest had reached agreements with a number of competitive local exchange carriers (CLEC), including Integra Telecom and Cox Communications.

The Department of Justice and the Federal Trade Commission cleared the deal last July, and shareholders from both companies approved it in August.

Several states approving the deal did so on condition that CenturyLink and Qwest make broadband infrastructure investments in those states; Washington State, for example, insisted on at least $80 million in investment over five years, while Utah agreed to at least $25 million over five years for its approval.

FCC approval was seen as the merger's final regulatory hurdle.

"We are pleased to receive the Commission's approval and appreciate their hard work during the review of our proposed transcation," said Glen F. Post III, CenturyLink president and CEO, in a statement. "The merger of CenturyLink and Qwest will bring greater broadband availability to customers and serves the public interest by allowing us to offer a wider variety of services than either company could offer alone."

The CenturyLink-Qwest deal was one of the largest transactions in an ongoing consolidation of the telecom service provider space. Earlier this week, AT&T confirmed it would acquire T-Mobile USA from Deutsche Telekom for $39 billion -- one of the biggest telecom deals in a decade.

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