It's Official: CenturyLink To Acquire Level 3 For $34 Billion

Telecom provider CenturyLink reached an agreement to acquire Level 3 Communications in a cash and stock deal worth $34 billion, the two companies said Monday morning.

Combined, the new company will become the second largest domestic communications provider serving global enterprise customers. The company will get about 76 percent of its revenue from business customers, according to CenturyLink and Level 3.

News of the deal comes after reports surfaced that said the two carriers were in merger talks late last week.

[Related: Reports Say CenturyLink And Level 3 Are Close To A Merger, Partners Approve]

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The deal gives the new company a greater competitive advantage, especially for business networking services. Combined with Level 3's fiber footprint that stretches across several continents, CenturyLink's network will be expanded by 200,000 miles of fiber, including 64,000 route miles in 350 metropolitan areas and 33,000 subsea route miles that connect multiple continents, the companies said.

"The digital economy relies on broadband connectivity, and together with Level 3 we will have one of the most robust fiber network and high-speed data services companies in the world," said CenturyLink CEO Glen Post in a statement. & t;It is this focus on providing fiber connectivity that will continue to distinguish CenturyLink from our competitors."

Both companies also released third-quarter 2016 earnings earlier than expected on Monday.

CenturyLink saw its net income fall to $152 million in the third quarter from $205 million in the third quarter last year. Total operating revenue dipped 3.8 percent, from $4.55 billion and earnings per share of 70 cents in third-quarter 2015 to $4.38 billion and earnings per share of 56 cents in third-quarter 2016.

The Monroe, La.-based carrier attributed the decrease in profits to sinking legacy revenue in its wireline business, which has been hit by heavy competition from AT&T and Verizon as bandwidth costs continue to be driven down.

Broomfield, Colo.-based Level 3, meanwhile, reported third-quarter 2016 revenue of $2.03 billion and earnings per share of 39 cents, compared with $2.06 billion and earnings per share of zero cents in third-quarter 2015. Net income was $143 million in the third quarter, up from $1 million in the year-ago quarter.

The combined company will retain CenturyLink's headquarters, but will maintain a presence in the greater Denver area. Post will be CEO of the combined company, and Level 3 CFO Sunit Patel will be CFO. CenturyLink also has agreed to appoint four Level 3 board members at the time of the deal's closing.

Both companies expect the deal to close by the end of third-quarter 2017.