Wednesday, October 18, 2006

L3 Buys Broadwing

Level3 won the bidding for Broadwing with a $1.2B price tag., taking in to account Broadwing's cash on hand of $350M. Basically, L3 wanted the Enterprise sales group as well as the fiber. As it converges all of its purchased assets - Telcove, Progress, ICG, Looking Glass, WilTel & BW - to one network, it will save money and finally get into the black ... in say 3 years, when you boil down all the rhetoric from CEO Jim Crowe. "Level 3 will consolidate the combined companies' traffic onto a single network to achieve opex and G&A reduction, bringing Broadwing's off-net traffic onto its own network to achieve better margins. O'Hara said Level 3 will eliminate a "good portion" of Broadwing's 19,000 route miles in aggregate because the two companies have duplicative city pairs."

Meanwhile, XO says "Selling Not in the Cards": "On the same day Level 3 Communications Inc. committed to buying Broadwing Corp., XO Holdings Inc. said it will not sell its wireline division. For now. Industry experts have speculated for several months Level 3 would buy XO Communications." XO: always a bridesmaid, never a bride.

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