CenturyLink-Level 3: Agents Offer Mixed Reviews

**UPDATE: CenturyLink announced its intent to buy Level 3 for $34 billion on Oct. 31.**

All eyes in the channel on are CenturyLink and Level 3 Communications after the news broke Thursday that the two are in advanced talks to merge.

A deal, with huge channel implications, could be announced in the coming weeks, the Wall Street Journal reported on Thursday, citing people “familiar with the matter.”

Both companies, which have a history of expanding through competitor acquisitions, have declined comment. But the channel, for the most part, isn’t holding back.

“The potential merger between CenturyLink and Level 3 seems to be a great fit,” John Cunningham, BCM One founder and co-CEO told Channel Partners. “The merger will create a financially healthy entity and will improve access for both companies – out of region for CenturyLink and in region for Level 3 – regarding both fiber and cost.  It will also improve the international footprint for CenturyLink due to the legacy Global Grossing acquisition by Level 3. Furthermore, both companies have a channel friendly environment and strong channel teams so culturally it would be a good fit, from our perspective.

PlanetOne CEO Ted Schuman said regardless of who may be buying whom these days, “channel partners need to stay the course and keep focused on the customer experience and growing their business.”

“A great line of questioning for Q4 and the New Year is how do you continue to grow your existing client base?” he said. “What more can you do to help meet your clients’ short- and long-term goals? Do you have the right alliances in play or are you flying solo? Bottom line: Don’t get distracted or derailed by deals out of your control. M&A happens, which is why channel partners always need a ‘Plan B’ and stand ready to seize the opportunity when a deal goes north or find a way out when it goes south.”

Karin Fields, MicroCorp’s CEO/COO, said she’s not surprised that Level 3 is looking to M&A, “but I am surprised it is CenturyLink.”

“It will be interesting to see how this all plays out,” she said.{ad}

Another agent, who wished to remain anonymous, said the merger talk is worrisome.

“While we are seeing evidence of operational improvement with Level 3, they have a long way to go,” the agent said. “I fear this would table that progress. Also Level 3 is far more friendly to the channel from a terms perspective. It was nice to have a big network player that was channel-friendly. Consolidating them with CenturyLink would take a viable competitive option away in the large deal space. Together, I worry they would feel like another Verizon.”

In July, analysts were buzzing about possible M&A involving Level 3. Wells Fargo analyst Jennifer Fritzsche said she saw Level 3 as more of a near-term buyer than seller. No other M&A talk surfaced until Thursday.