Wed, Nov. 9, 11:34 AM
- While Time Warner is trading lower as investors digest a slimmer chance of a buyout by AT&T under a Trump administration, Sprint (NYSE:S) -- a company long thought to again become a merger prospect after a change in the White House -- is up 12.5% and hitting two-year highs today.
- Its oft-discussed merger matchup partner, T-Mobile (NASDAQ:TMUS) is up 3.8%.
- Meanwhile, changes are likely coming to the FCC, Wells Fargo argues: It will at least be more conservative, if not working under new leadership soon; expecting Chairman Tom Wheeler to stay a full term is "no longer realistic."
- "If the rhetoric of those surrounding Trump’s campaign rings true, we can expect a Republican FCC to make a big push to roll back some of the regulations put in place under President Obama such as the Title II/Net Neutrality rules," writes analyst Jennifer Fritzsche. "There may also be a push to roll back some or all of what the FCC just did on privacy."
- "It’s unclear whether Chairman Wheeler will be able to act on the open items related to Business Data Services or set top box reform before he departs and if he does not, some suggest a Republican FCC will reverse course on these two items. There is also a big question on how a Trump FCC will view transactions including the recently announced T/TWX merger and the LVLT/CTL transaction."
- LVLT +0.4%; CTL +0.5%. TWX -1%. Names tied to net neutrality: T, VZ, CMCSA, CHTR, OTCPK:ATCEY, CTL, FTR, CCOI, DISH.
Tue, Nov. 8, 12:11 PM
- Oppenheimer's downgraded AT&T (T +0.5%) on the prospect that the FCC could jump in with the Justice Dept. on a review of the telecom's $85B deal for Time Warner (TWX +0.1%).
- And that deal review should be a long slog, says Tim Horan: lasting into 2018, he figues, during which time he expects AT&T stock to be range-bound.
- The DOJ suing the company over the Dodgers' TV channel is an "ominous sign," he says, and the FCC will likely want a piece due to the approach to "zero rating" of the DirecTV Now streaming service.
- He reduced the firm's rating on shares to Market Perform. Meanwhile, seeing a more attractive dividend at CenturyLink (CTL +4%), Horan upgraded CTL to Outperform. Oppenheimer has a $30 price target, implying near 24% upside from today's higher price.
Fri, Nov. 4, 9:37 AM
- CenturyLink (NYSE:CTL) has opened up 2% after news that it's reached a deal to sell its data center/co-location business, to a consortium led by BC Partners and Medina Capital.
- That consortium will pay $2.15B in cash and a stake of about $150M in its newly formed infrastructure company. It will assume control of the portfolio of 57 data centers at closing, a set that covers about 195 megawatts of power across 2.6M square feet of raised floor.
- BC Partners was reported to be in the lead for the business last month, and CenturyLink ended up getting close to its desired $2.5B in the deal.
- CenturyLink will use proceeds in part to fund its acquisition of Level 3 Communications (LVLT +1.1%).
- The sale is expected to close in the first quarter; it will need Hart-Scott-Rodino clearance as well as the Committee on Foreign Investment in the United States, among others.
Mon, Oct. 31, 7:43 PM
- The deal to be acquired by CenturyLink (CTL -12.5%) has gotten Level 3 Communications (LVLT +3.9%) an affirmed credit rating, though a lower, stable outlook from Moody's.
- The ratings company affirmed Level 3's Ba3 corporate family rating and its ratings of existing debt, and affirmed the Ba3 probability of default rating. It changed the outlook on Level 3 to stable from positive, though.
- The acquisition isn't going to have much effect on existing debt instruments, Moody's says. The firm is putting CenturyLink's ratings on downgrade review, and it will focus on leverage and cash flows at the combined entity, along with growth potential.
- Any downgrade to CenturyLink is expected to be contained to one notch (possibly to Ba3).
Mon, Oct. 31, 6:41 PM
- While Level 3 Communications (LVLT +3.9%) escaped CenturyLink's (CTL -12.5%) stock-price fate on confirmation of its buyout, the company saw downgrades as analysts digested post-merger upside.
- William Blair downgraded shares to Market Perform, saying that while the merger makes for a better competitor to AT&T and Verizon, growth could become an issue. "Neither Level 3 nor CenturyLink has been aggressively investing in network build-outs to support customer dark fiber deployments, which has hindered wholesale expansion," writes Jim Breen. "CenturyLink’s consolidated revenue was declining, and Level 3's core enterprise revenue has been decelerating."
- Cowen & Co. cut to Hold as well, analyst Colby Synesael expects the deal's structure means the two stocks trade in line with each other.
- "We'd point out that the real value of this deal from a CTL perspective is Level 3’s FCF (plus the additional cost synergies)," he writes, "and to that point the reduction in Level 3 expected top-line performance has less impact on EBITDA/FCF as we note that even with the miss the company still managed to beat on EBITDA/FCF." He expects both companies' stocks to "bleed up" in coming quarters.
Mon, Oct. 31, 2:14 PM
- CenturyLink (CTL -12.8%) and Level 3 Communications (LVLT +4.3%) have headed in opposite directions today after confirmation of CenturyLink's $34B deal to acquire the networking firm.
- Level 3 has hung just off its 52-week high on the news, while CenturyLink is at its lowest point since February. The particulars of the deal -- a 49% premium to Level 3's closing last Wednesday -- may have CenturyLink's investors balking (the same folks who bid CenturyLink up 9.7% when early reports of a deal began to break last Thursday).
- Despite that big decline, the news may be good for CenturyLink's dividend, which is likely more secure, argues Wells Fargo's Jennifer Fritsche. "Improved free cash flow will enhance the combined company's financial flexibility and significantly lower its payout ratio; CTL expects to maintain its annual dividend of $2.16 per share."
- "The increased scale afforded by the combined company is expected to generate $975 million of annual run-rate cash synergies, primarily from the elimination of duplicative functions, systems consolidation, and increased operational and capital efficiencies," Fritsche writes.
- The combo should also benefit from almost $10B in net operating losses that Level 3 has.
Mon, Oct. 31, 6:43 AM
- CenturyLink (NYSE:CTL) and Level 3 Communications, Inc. (NASDAQ:LVLT) announce that CenturyLink will acquire Level 3 in a cash and stock transaction valued at approximately $34B, including the assumption of debt.
- LVLT shareholders will receive $26.50/share and 1.4286 shares of CTL stock for each Level 3 share they own, which implies a purchase price of $66.50/LVLT share - a premium of approximately 42% based on Level 3's unaffected closing share price of $46.92 on 26-Oct-16, the last trading day prior to market speculation about a potential transaction.
- Upon the closing of the transaction, CenturyLink shareholders will own approximately 51% and Level 3 shareholders will own approximately 49% of the combined company.
- The combined company will have approximately $19B in pro forma business revenue and $13B in business strategic revenue.
- Combined company is expected to have improved adjusted Ebitda margins, revenue growth and pro forma net leverage of less than 3.7x at close, including run-rate synergies. The combined company will benefit from Level 3's nearly $10B of net operating losses. These NOLs will substantially reduce the combined company's net cash tax expense over the next several years, positioning it to generate substantial free cash flow.
- CenturyLink expects to maintain its annual dividend of $2.16 per share.
- Conference call today at 8:00 AM ET. (866) 610-1072 within the U.S. and (973) 935-2840 for all other locations. Confirmation code is 10841687.
Fri, Oct. 28, 1:40 PM
- CenturyLink (CTL -1.4%) is giving back some of yesterday's merger-chatter gains, but Level 3 Communications (NASDAQ:LVLT) is adding on, up another 3.9% today.
- Level 3 jumped 10.6% yesterday, and CenturyLink rose 10%, on a report that the two were in advanced talks to merge.
- Level 3's at $53.90 today (after closing at $46.92 on Wednesday), and it's looking for at least $60/share in a buyout and $65 "could be reasonable," says Raymond James, which cut CenturyLink to Market Perform from Outperform -- thinking that stock could trade sideways for the months it could take to close such a deal.
- UBS sees the deal cresting $1B in synergies, given the companies' overlapping infrastructure. Analyst Batya Levi is assuming an all-stock deal at 9-11 times EBITDA and has CenturyLink at a Buy with a $36 price target (implying 18% upside).
- Oppenheimer's Timothy Horan, meanwhile, sees more of a 50/50 cash/stock split at a $60 valuation for LVLT. He's got CTL at Market Perform but boosts LVLT to Outperform at that $60 target.
- Among peers (and other potential targets) today: CCOI -1.2%, INXN +2%, GTT flat, ZAYO +1.9%, AKAM +0.9%, FTR -2.4%.
Thu, Oct. 27, 1:29 PM
- CenturyLink (NYSE:CTL) is off a circuit-break halt up 14.9% on news it's in advanced talks to merge with Level 3 Communications (NASDAQ:LVLT), itself up 6.5%, according to The Wall Street Journal.
- A deal could be announced in coming weeks, sources told the WSJ, but no terms have been reported as yet.
- Level 3 operates one of the world's largest Internet backbones. CenturyLink, for its part, has looked to sell some of its data centers even as it has reached into hosting and cloud services.
- It would be the latest big deal in a consolidating (and still highly competitive) telecom sector.
- CenturyLink is set to report earnings Nov. 2, while Level 3 is scheduled for the morning of Nov. 3.
Tue, Oct. 11, 5:16 PM
- BC Partners is the firm in the lead to take over the data center business from CenturyLink (CTL -0.7%), in a deal that CenturyLink hopes crosses the $2.5B mark, Reuters reports.
- But the deal is uncertain because of complicated leases CenturyLink has with Digital Realty Trust (NYSE:DLR).
- The lead rival for a deal -- a consortium with GTCR, Charlesbank Capital Partners, Berkshire Partners and Stonepeak Infrastructure Partners -- has broken up without a deal, sources told Reuters.
- CenturyLink was reported to be months away from a deal because of the difficulty in telecoms separating data centers from tightly intertwined services (like "separating Siamese twins"). Facing the same challenges, AT&T scrapped its plan last year to sell data centers.
Wed, Sep. 28, 7:51 PM
- CenturyLink (CTL +0.7%) -- working for over a year on a potential divestment of its data centers -- is months away from separating them from its existing hosted managed services business, CTFN reports.
- That means a sale is far off, but it's still a quicker pace than before, a source tells CTFN. Separating intertwined data centers and managed services is akin to "separating Siamese twins," the banker says.
- The source estimates it could take six months to separate the services business form physical assets connecting the networks. Reuters reported that a consortium of private-equity buyers has formed to buy the assets for as much as $2.5B.
Fri, Sep. 9, 4:56 AM
- GTCR, Charlesbank Capital, Berkshire Partners and Stonepeak have teamed up to bid on a data center business that CenturyLink Inc (NYSE:CTL) is hoping to divest for more than $2.5B, Reuters reports.
- The move illustrates that private equity firms will still occasionally partner in so-called club deals when the amount of equity they need to raise exceeds the commitments their funds and their investors can make.
Wed, Mar. 30, 10:18 AM
- CenturyLink (CTL +0.7%) has acquired netAura, a firm specializing in managed security technologies, to shore up its offerings for business and government.
- Virginia-based NetAura has worked extensively with government agencies and businesses on cybersecurity, security information and event management (SIEM), analytics and vulnerability management, the company says.
- The move also echoes last month's launch of CenturyLink's Managed Security Services suite, an IT services offering intended to act as the backbone of a customer's security approach.
Nov. 23, 2015, 8:34 PM
- Data center operators probably aren't in a buying mood for facilities that might be for sale -- particularly CenturyLink's, Macquarie suggests in a new report -- but private-equity firms could come in with bids.
- CenturyLink (NYSE:CTL), the nation's third-largest local phone company, plans to sell 59 centers worldwide, and while Macquarie had thought Digital Realty Trust (NYSE:DLR) would get involved, analyst Kevin Smithen has changed his view after attending an industry trade show.
- He now doubts that a buyer will come from among Digital Realty, DuPont Fabros (NYSE:DFT), Equinix (NASDAQ:EQIX), CyrusOne (NASDAQ:CONE), CoreSite or QTS Realty, with a limited "pool of logical and capable buyers" for assets from CenturyLink, or from Verizon (NYSE:VZ) or AT&T (NYSE:T). But near term, "private equity seems like the most likely acquirer of assets this size."
- While CenturyLink assets are for sale, Verizon CFO Fran Shammo tried to shut down "speculative" reports that the company would pursue $10B in asset sales.
May 21, 2015, 6:04 PM
- Giving some key hope to suitors for Time Warner Cable not named Comcast (NASDAQ:CMCSA), FCC Chairman Tom Wheeler placed individual calls to various cable execs -- including TWC's Rob Marcus and Charter's Tom Rutledge -- to say the agency's not against any and all deals just because it kiboshed Comcast's, The Wall Street Journal is reporting.
- Wheeler reportedly wanted to clarify the FCC stance amid industry confusion about just how much consolidation it would support, and said that each potential deal would be judged on its merits.
- Wheeler did express that he's like to see more competition from companies that traditionally haven't battled in the same geographies, and encouraged the prospect of cablecos "overbuilding" into each other's service areas, according to the WSJ.
- With TWC looking like the key catch, its stock has risen 8.9% over the past month.
- Consolidation prospects: TWC, CHTR, OTC:ATCEY, CVC, CTL, FTR, WIN, FRP, CBB
Apr. 20, 2015, 6:41 PM
- CenturyLink (NYSE:CTL) has acquired database service provider Orchestrate, in order to add its capabilities into the CenturyLink Cloud platform.
- Orchestrate promises to save clients the hassle of running their own database instances by providing multiple varieties of database-as-a-service offerings.
- It's one of a few recent moves by CenturyLink to shore up data analytics, including the fall acquisitions of DataGardens and Cognilytics.
- Orchestrate's key leadership is joining CenturyLink, including co-founders Antony Falco (CEO) and Ian Plosker (CTO).
- The two firms are recent partners, as Orchestrate became available via CenturyLink Cloud early last month.