Qwest, CenturyLink finalize merger, become fourth largest carrier

Qwest Communications and CenturyLink complete their merger and the government unit, which holds the Networx contract, will continue to operate as Qwest for the next several months.

A year in the making, CenturyLink Inc. and Qwest Communications International Inc. completed their merger on April 1.

The Federal Communications Commission March 18 gave its approval to the pending merger between CenturyLink and Qwest.

The estimated $12.2 billion transaction was structured as a tax-free, stock-for-stock exchange. Under the terms of the merger agreement, Qwest stockholders will receive 0.1664 shares of CenturyLink common stock for each share of Qwest common stock they owned at closing, plus cash paid in lieu of fractional shares.

The combined companies had 2010 revenues of $18.6 billion. CenturyLink expects to continue its current annual dividend of $2.90 per share.

The union bolsters CenturyLink’s position as the nation's third largest telecommunications company (Qwest was No. 4), after AT&T Inc. and Verizon Communications Inc., and will reach 37 states, serving 17 million phone lines and 5 million broadband customers via its 190,000 route-mile fiber network.

However, the FCC approval comes with conditions, including fulfillment of a promise by CenturyLink to offer for up to five years, low-income customers $150 PCs. Qualifying households will also receive, starting from the approval date, a year’s worth of broadband starting at $10 per month, and rising the second year to $15 per month.

The company also had to agree to significantly increase the capacity of the Qwest network, bringing broadband with actual download speeds of at least 4 Mbps to at least four million more homes and businesses, and at least 20,000 more anchor institutions, such as schools, libraries, and community centers.

The yearlong merger effort accelerated last month, when Oregon on March 24 became the final state to give its nod to the merger by 21 states and the District of Columbia that began June 14 with California.

The newly merged company will retain the CenturyLink name, although Qwest entities will continue to operate under the Qwest name pending an official name change.

One such entity, Qwest Government Business, holds Universal and Enterprise contracts under the General Services Administration’s Networx telecommunications acquisition vehicle. “We’ll continue to operate under the Qwest name for several months, until we get the legal name change,” said Tom McMahon, a Qwest Government Business spokesman.

CenturyLink will retain its Monroe, La., headquarters, while maintaining its business markets group headquarters in Qwest country near Denver. That city will also be home to one of the company’s six regional headquarters, with the other five in Apopka, Fla., Minneapolis, Phoenix, Seattle and Wake Forest, N.C.

The company's board of directors includes current CenturyLink board members and four members of Qwest's board. Those joining the CenturyLink board are Edward Mueller, Charles Biggs, Michael Roberts and James Unruh.

Qwest Communications International Inc. ranks at No. 56 in Washington Technology’s 2010 Top 100 list of the largest government contractors.