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13 May 2011
Level 3 Communications has announced an agreement to buy Global Crossing in a $3bn (€2.1bn) deal including debt. The deal highlights the merits of consolidation in the long-haul communications services market.
The acquisition will almost double Level 3’s revenues to $6.3bn (€4.4bn) based on the joint 2010 revenues, while the resulting network will have connections in over 70 countries.  The increased Internet traffic flowing through the merged networks will also reduce the transport fees that Level 3 pays to other carriers.
Level 3’s service portfolio will also benefit from Global Crossing's larger portfolio of managed services. Global Crossing serves 40% of Fortune 500 enterprises, 700 operators and internet service providers. Jim Crowe, chief executive of Level 3, highlighted how the operator will be able to offer a portfolio of transport, data, content delivery, data center, co-location and voice services delivered to customers globally. In particular he highlighted the success of Global Crossing’s virtual private network (VPN)  service.
Level 3 will also extend its content delivery network (CDN) from its US stronghold to Latin America and Asia. A CDN stores popular content closer to users, saving backbone traffic while improving the users’ service experience. Level 3 sells its CDN to content providers to enhance their service delivery.  Online video provider Netflix is one customer of Level 3’s CDN.
Level 3 believes content delivery will be a source of significant growth in coming years. “Audiences are in the process of migrating from watching traditional terrestrial content to viewing ever more bandwidth- intensive content online,” said Derek Gough, director of product management at Level 3 Communications. “We have seen an explosion in CDN traffic and we see no signs that it will slow down.”
By Roy Rubenstein