CenturyLink Inc. (CTL - Free Report) , leading regional wireline service provider in the U.S., is forging ahead with new deals and business expansion schemes to fortify its fiber foothold. The telco is presently focused on delivering fiber-to-the-premises (FTTP) 1 Gbps (gigabit per second) services in three states – Nebraska, North Dakota and South Dakota – in the Midwestern region of the U.S. This fiber facility will equip 484 multitenant unit (MTU) office buildings and reach out to 4,318 small to large businesses in these states.
This will allow customers to integrate 1 Gbps with VoIP, cloud-based services like Microsoft Office 365 and other managed IT solutions. This FTTP drive is basically a follow-up of the company’s initial 1 Gbps fiber-based services provision scheme covering 16 cities, which was announced in Aug 2014.
CenturyLink plans to offer 1 Gbps service to multiple fiber-ready businesses in several cities but the impact will be most significant in seven cities of the three states. In Nebraska, the service will be provided in the cities of Omaha, Papillion and Grand Island. In South Dakota, CenturyLink will make the service available to businesses in one of its largest city, Sioux Falls and Rapid City. In North Dakota, the same will be provided to the most populous city, Fargo and its capital city, Bismarck.
Further, the $34 billion (including debt) deal to acquire Level 3 Communications Inc. in a cash and stock transaction will help CenturyLink expand its near-net and on-net fiber presence. The equity value of this deal is approximately $25 billion.
This deal is expected to help both the companies maintain their business momentum in the wake of severe competitive threat from large telecom operators such as Verizon Communications Inc. (VZ - Free Report) , AT&T Inc. (T - Free Report) and Comcast Corp. (CMCSA - Free Report) .
If the proposed merger materializes, it will expand CenturyLink's network by 200,000 route miles of fiber, including 64,000 route miles in 350 metropolitan areas and 33,000 subsea route miles connecting multiple continents. CenturyLink's on-net buildings are expected to increase by nearly 75% to approximately 75,000, including 10,000 buildings in EMEA (Europe, the Middle East and Africa) and Latin America. Therefore, a merged CenturyLink and Level 3 Communications will become a formidable challenger to their large counterparts.
We believe that such fiber expansion deals will help CenturyLink pursue more fiber-related deals and thus open up the scope to cater to many new locations and buildings which are not yet equipped with its fiber plans. CenturyLink’s investment in fiber-to-the-tower (FTTT) has also expanded its fiber-based backhaul services. The company is also focused on establishing itself as a global leader in cloud infrastructure and hosted IT solutions arena designed for enterprise customers. For businesses, the 1 Gbps speeds are meant to help customers take better advantage of CenturyLink's growing set of cloud and managed service capabilities.
CenturyLink currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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