CenturyLink's Level 3 Buy Gets OK in 2 States

Two states have become the first to approve CenturyLink‘s big Level 3 purchase.

Ohio and Utah gave their approval, and the state of Nevada has given regulatory clearance to the approximately $34 billion acquisition. John Jones, CenturyLink’s senior vice president of public policy and government relations, said the merger will create “more services and opportunities” for the enterprise business markets in those states.

“We continue to believe that policymakers, interested in advancing their states in an evolving internet economy, recognize that strong networks are key to our country’s future economic development, job creation and ability to stay connected,” Jones said.

CenturyLink started filing applications with regulatory agencies last December. The U.S. Justice Department and Federal Communications Commission also are reviewing the deal. Shareholders from the companies are expected to vote to approve the deal March 16.

CenturyLink first announced plans to acquire Level 3 for $34 billion in October.{ad}

The channel community has received the news of the deal with mixed feedback. Telarus co-founders Adam Edwards and Patrick Oborn warned that the sheer size and complexity of the CenturyLink-Level 3 entity might force master agents to invest more in sales support for their customers. However, they said partners will have more than 10 months to make adjustments before the anticipated close of the transaction at the end of 2017’s third quarter.

“It’s clear the combination is a win for stakeholders in the organizations because of the scale that will be achieved and the elimination of a competitor in the marketplace,” they wrote in a Channel Partners column. “We believe this transaction will be approved by regulators and that partners should prepare to work with the combined organization.”

Some analysts have praised the immense fiber capabilities the combined company would have, and Level 3 praised the increased SMB base it hopes to obtain from the deal.

“Level 3 has always been laser-focused on the higher end enterprise customer, and as such, its value-added services, like Voice Complete, were tailored to match the specific needs of that market,” Frost & Sullivan analyst Michael Brandenburg told Channel Partners last year. “Channel partners, particularly those that cater to the midsize and enterprise customers, will have to be mindful on CenturyLink’s road map as they rationalize their service offerings.”

One industry association criticized the deal as one that would kill consumer choice and raise prices thanks to the elimination of a competitor, although it noted the move made sense for CenturyLink.