Telecommunications carrier CenturyTel has agreed to buy Qwest Communications International for around US$10.6 billion in stock. The merged company will operate around 17 million phone lines and serve 5 million broadband customers across 37 U.S. states.
The combined company will have a 173,000-mile fiber network. Qwest has been investing heavily in upgrading its network backbone in order to offer businesses 100G bps Ethernet services. CenturyTel expects much of the merged company's future growth to come from enterprise services.
Together, CenturyTel and Qwest would have had annual revenue of around $19.8 billion in 2009, CenturyTel said. Alone, it reported operating revenue of $4.9 billion for that period.
CenturyTel trades as CenturyLink, a name it adopted after swallowing up another U.S. carrier, Embarq, in a $5.8 billion all-stock deal 18 months ago. Embarq was previously the fixed-line and broadband division of Sprint Nextel.
Following the merger with Qwest, CenturyTel expects to cut annual running costs by $575 million. It could, however, take up to five years to reach that target, with one-time capital costs of up to $200 million and operating costs of up to $800 million, the company said.
CenturyTel valued the deal at $22.4 billion, including the assumption of Qwest's $11.8 billion in debt.
The companies expect to close the deal by the middle of next year, subject to approval from both companies' shareholders, the Federal Communications Commission and antitrust regulators.
The stock swap will leave CenturyTel shareholders with around 50.5 percent of the combined company. Five of the nine seats on the board will go to CenturyTel directors, including Chairman William A. Owens, CEO Glen F. Post and the company's CFO and COO, while four will be drawn from Qwest's board, including the company's chairman and CEO Edward A. Mueller.