Broomfield – In another sign of consolidation in the telecommunications industry, network operator Level 3 Communications Inc. agreed today to acquire privately held TelCove Inc. for about $1.08 billion in cash and stock.
The deal is the fourth acquisition in nine months for Broomfield, Colo.-based Level 3, which saw its shares jump 5 percent in afternoon trading.
Level 3 will pay $637 million in shares and $445 million in cash for TelCove, a regional telecom that has 22,000 miles of local and long-haul routes across the Eastern United States. It also has licenses for microwave spectrum that could be used for fixed wireless links in areas that cover 90 percent of the U.S.
population.
Level 3 would assume $155.5 million in TeleCove debt in the deal.
In recent months, Level 3 has agreed to buy WilTel Communications Group LLC, Progress Telecom and ICG Communications as it competes for business customers with larger rivals, such as Verizon Communications Inc. and AT&T Inc., which itself is the result of SBC Communications’ purchase of AT&T Corp. The new AT&T also plans to purchase BellSouth Corp.
Level 3 operates a 23,000-mile fiber optic network and provides wholesale dial-up service to Internet service providers as well as network connectivity for broadband subscribers in the United States and Europe.
“TelCove’s networks in key markets throughout the Eastern United States are complementary with Level 3’s existing infrastructure, including the networks we have recently acquired,” said Kevin O’Hara, Level 3’s president and chief operating officer.
Level 3 began its acquisition spree last year by buying WilTel Communications Group LLC from Leucadia National Corp. for $486 million in cash and 115 million shares of common stock worth about $339 million. In January, it said it was buying Progress Telecom LLC for $137 million to expand its presence in the southeastern United States.
Last month, the company announced plans to buy ICG Communications for $163 million in cash and stock in a deal that gives it control over ICG’s metropolitan and regional networks in Colorado and Ohio.
Shares of Level 3 rose 27 cents, to $5.67, in afternoon trading on the Nasdaq Stock Market.
