Reports Say CenturyLink And Level 3 Are Close To A Merger, Partners Approve

Telecom providers CenturyLink and Level 3 Communications are reportedly in talks to join forces, the Wall Street Journal reported on Thursday.

A possible merger would combine Level 3's robust fiber footprint, with CenturyLink's networking, cloud and software-defined networking (SDN) expertise, partners say.

While terms of the reported deal are unknown, a merger could be announced in the coming weeks, according to the Wall Street Journal, citing sources familiar with the matter.

[Related: Partners Ponder The Possibility - And The Implications - Of An Acquisition Of Level 3]

The potential CenturyLink/Level 3 merger comes at a time in which many traditional telecom providers are trying to reinvent themselves in order to stay relevant and bring more value to their customers, said Michael Bremmer, CEO of Moreno Valley, California-based TelecomQuotes.com, a telecom consultancy.

"The problem is, these carriers don't know what they want to be when they grow up," Bremmer said.

Level 3's far-flung fiber infrastructure expands more than 100,000 fiber miles in North America, Europe, Latin America and Asia. Its footprint also includes 30,000 metro route miles and 35,000 subsea route miles. CenturyLink, a service provider with a smaller backbone, has a robust portfolio of cloud, hosting and SDN services that could be expanded to more customers if the two companies come together, partners say.

Carrier Access, Inc., a Des Moines, Iowa-based solution provider and CenturyLink Premier Partner believes that a merger between the two companies would be welcome to the market, said Shane Stark, director of vendor and channel relations for Carrier Access.

CenturyLink and Level 3 have a lot of synergies, Stark said.

"From a partner standpoint, it's a great thing to see two companies that have been partner-friendly come together. I think it would be a fantastic fit, " he said.

A CenturyLink/Level 3 combination will help both companies offer more valuable services to the market, TelecomQuotes' Bremmer added.

"You have to sell something interesting, because there is enough pipe to go around." he said.

Thursday's news isn't the first time that merger speculation has swirled around Level 3. Reports surfaced last summer that the Broomfield, Colo.-based telecom was exploring a large stock buyout or outright sale of the company. At the time, cable giant Comcast was named as Level 3's main suitor.

A merger with CenturyLink, however, is far more likely, and a better fit, Bremmer said.

CenturyLink has also experienced some turbulence this year. In September, the Monroe, Louisiana-based provider sent a memo to employees saying that it would need to reduce its global staff by as much as 8 percent.

CenturyLink's data center strategy is also still up in the air. During the service provider's Q2 earnings call, CenturyLink President and CEO Glen Post said on the call that the "probable sale" of its data center assets would be announced by the beginning of the fourth quarter.

A possible merger, however, could stand to help CenturyLink hang onto its data center facilities, said one CenturyLink partner that requested anonymity.

"I would think that the merger could help them not sell those [data centers], especially if Level 3 has connectivity into most of those data centers and could help more customers get into those facilities," the partner said.

Both CenturyLink and Level 3 cited policies not to comment on rumor or speculation when reached by CRN for comment.

CenturyLink and Level 3 are slated to announce its Q3 2016 earnings next week.