Level 3 Communications, Inc.NASDAQ
Netflix: No Thanks - We'll Have Level 3 Instead
Focus Equity • 61 Comments
Focus Equity • 61 Comments
Wed, Nov. 9, 3:03 PM
- With a Trump agenda calling for "an immediate review of all U.S. cyber defenses and vulnerabilities" among other items to be addressed, the sector has seemingly responded positively on the near-term. Exact methods or execution revolving around the position, however, of course remains awaited.
- Sector price movements – FireEye (FEYE +0.5%), Palo Alto Networks (PANW +3%), Fortinet (FTNT +1%), CyberArk Software (CYBR +3.5%), Check Point Software Technologies (CHKP +1.7%), Proofpoint (PFPT +2.3%), Imperva (IMPV +0.8%), Symantec (SYMC +0.6%), Barracuda Networks (CUDA +2.2%), VASCO Data Security International (VDSI +3.7%), Akamai Technologies (AKAM +0.3%), Limelight Networks (LLNW +2.2%), Level 3 Communications (LVLT +1.9%)
- Related – (NYSEARCA:HACK)
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.
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, 9:19 AM
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.
Mon, Oct. 31, 6:41 AM
- Level 3 (NASDAQ:LVLT): Q3 EPS of $0.39 misses by $0.03.
- Revenue of $2.03B (-1.5% Y/Y) misses by $40M.
- Shares +3.89% PM.
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, 3:00 PM
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.
Thu, Oct. 27, 1:10 PM| Thu, Oct. 27, 1:10 PM | 9 Comments
Fri, Oct. 21, 1:50 PM
- See: Internet attack takes many sites offline for hours
- Up today – FireEye (FEYE +1.9%), Palo Alto Networks (PANW +0.6%), Fortinet (FTNT +1.5%), Cyberark Software (CYBR +3.9%), Check Point Software Technologies (CHKP +0.8%), Proofpoint (PFPT +10.5%) [see earnings]
- Despite these gains, on the last-month term FireEye's lower by 9%, Palo Alto Networks' unmoved, Fortinet's down 11%, Cyberark Software's down 6%, Check Point Software Technologies' up 2% and Proofpoint's up 1.7%. Names down today in the space include Imperva (IMPV -2.6%), Symantec (SYMC -0.3%) and Barracuda Networks (CUDA), respectively lower by 12%, 4% and 1% on the month.
- CDN providers – Akamai Technologies (AKAM +1.5%), Limelight Networks (LLNW -0.5%), Level 3 Communications (LVLT -0.6%)
- Related – (NYSEARCA:HACK)
Mon, Oct. 10, 11:23 AM
- Level 3 Communications (LVLT +0.7%) has added a pair of names to its leadership with two new technical appointments.
- The company named Andrew Dugan its new chief technology officer, and Atilla Tinic its chief information officer, effective immediately.
- Tinic is newer to the company, having joined in 2014 as part of its Tw Telecom acquisition; he's been senior VP of IT. Dugan has been with Level 3 since 1998 and since June has been interim lead for the Global Technology and IT organization.
- Dugan will keep leading that organization with a focus on global network technology, architecture, engineering, network systems and security.
Wed, Oct. 5, 11:05 AM
- An outage that hit a number of telecoms yesterday was tied to a technical issue at Level 3 Communications (LVLT -0.3%).
- A configuration error caused downtime for several of its customers, the company acknowledged, but it didn't say which customers or for how long.
- Meanwhile, reports had circulated about outages hitting the big four wireless providers (T, VZ, TMUS, S) as well as Comcast (NASDAQ:CMCSA). Problems lasted an hour or more, though Level 3 said issues were resolved around 11:30 a.m.