Level 3's $3 billion acquisition of Global Crossing nearly doubles its size and dramatically expands its presence in Europe and, perhaps more pointedly, in Latin America, at a time when bandwidth is becoming increasingly important in that growing market and across the world.
The deal calls for Level 3 to pay $1.9 billion in stock and $1.1 billion in assumed debt and is expected to close before the end of the year. Currently, Singapore Technologies Telemedia owns 60 percent of Global Crossing; it has said it supports the merger and will appoint several members to Level 3's board.
Global Crossing once was valued at $60 billion, but the cost of building its global network, a huge debt burden and declining customer base drove it to file for bankruptcy in 2002.
Level 3, too, has seen its debt grow as its network expanded. In 2010, it reported $6.4 billion in debt. But this deal helps it cut costs and gives it increase access to growing markets, allowing it to exert more influence over bandwidth pricing.
"It's pretty obvious that bandwidth is a basic necessity," Level 3 Chief Executive Jim Crowe said. "Food, water, air and bandwidth, both to your wired connection in your home and, increasingly at a pace that's breathtaking, to your handset. That's a development of the last three years or so."
- see this Denver Post story
- see this FierceTelecom report
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