The Justice Department has given the green light to CenturyLink's $34 billion acquisition of Level 3 Communications, announced roughly one year ago. While the deal will be approved, there were some modest conditions. The DOJ stated CenturyLink must divest some metro network assets in Albuquerque, Boise, and Tucson, but noted the new company can still service those customers if they choose CenturyLink over whomever buys the new divested assets. CenturyLink also has to divest 24 strands of dark fiber.
Traditionally, these types of conditions don't mean all that much, and quite often are voluntarily proposed by the merging company to get the deal approved.
“Because of competition between CenturyLink and Level 3, consumers have benefited from lower prices and higher-quality services in local telecommunications services and in the sale of intercity dark fiber,” said Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division in a statement. “These divestitures will ensure that consumers of such services in the affected metropolitan areas and consumers of dark fiber between the city pairs in question will continue to enjoy the benefits of competition.”
The merger comes as the FCC has been stripping away oversight over what's a highly uncompetitive special access and business data services (BDS) market. Consumer advocates and numerous companies had argued that the CenturyLink merger, combined with this eliminating of sector oversight, will only drive up costs for consumers.
The deal is CenturyLink's attempt to please investors with growth into enterprise markets as the company's residential broadband subscriber base continues to shrink. The company has been consistently losing residential broadband subscribers in areas it's unable or unwilling to upgrade last-generation DSL lines to next-generation fiber. Growing larger for the sake of growing larger while pushing harder into the enterprise space likely won't change that dynamic.
Needless to say, CenturyLink applauded the DOJ's approval.
"We are pleased that the Department of Justice has conditionally cleared CenturyLink’s acquisition of Level 3,” said CenturyLink SVP John F. Jones. “It is an important milestone in our overall approval process. We anticipate court approval of our agreed resolution with the Department of Justice as early as this week. We are focused on meeting our targeted transaction closing timeframe of mid-to-late October.”
