Level 3 Completes Acquisition of WilTel

Level 3 Communications Inc. said today it has completed its acquisition of WilTel Communications Group LLC. The wholesaler paid Leucadia National Corp., WilTel’s parent company, 115 million shares of Level 3 common stock and $386 million in cash.

The deal between the two former rivals was announced in late October and was expected to close in the first quarter of 2006. The transaction was able to close early, however, because of “hard work by all involved,” said James Q. Crowe, CEO of Level 3.

Level 3 bought all of Tulsa, Okla.-based WilTel’s communications business, including the Vyxx video transmission division and the SBC Communications Inc. – now AT&T Inc. – contract, good through 2009. The new AT&T is WilTel’s largest customer. When the industry learned SBC planned to acquire AT&T, WilTel saw the writing on the wall and deduced that most of the SBC traffic it carried would be moved to AT&T, TeleGeography Senior Analyst Rob Schult told PHONE+ in November. In light of that, WilTel needed a way to remain viable, and merging with Level 3 achieves that aim, he said. For now, Level 3 executives project the company’s ledgers will record up to $90 million thanks to the AT&T contract in 2006.

Level 3 said its network, once it is tied to WilTel’s, will reach 50 new markets and include 3,000 new route miles. The underlying provider is especially strong in wholesale bandwidth and IP infrastructure, and plans to bring WilTel’s IP, optical and voice transport traffic over to its network. Level 3 has indicated it plans to remove as many overlapping network elements as possible, reducing the inventory of lit bandwidth on many routes around the country.

AT&T Inc. www.thenewatt.com
Level 3 Communications Inc. www.level3.com
WilTel Communications Group LLC www.wiltel.com

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