aurora's blog

Aurora Nguyen

Level 3 Communications announced on Monday that it would buy Global Crossing for $3 billion. Is it me or does it seem like the entire telecom sector is consolidating? AT&T acquiring T-Mobile being just one recent example. Not a good thing for consumers if we're back down to only a handful of telecom competitors. Look at what telecom expert Peter Radizeski has to say about this:

Level3 finally buys Global Crossing for $3B including assuming $1.1B in GC debt.
This is a merger that the industry has expected for some time. Honestly, I don't see how it works, because it's about synergies. My favorite word, because it means we will fire a lot of people with overlapping job titles, but not overlapping knowledge. The combined revenue will be $6.6B while the debt will be $7.8B. The L3 CFO is a magician! How he is able to wave his wand to hold back Wall Street, do an acquisition, and pay off interest is utterly amazing. (Although the press release does say that this transaction improves the credit report.) L3 also had to do some dancing to maintain its NOL's (Net Operating Losses). These are the same tokens that Carl Icahn fought so hard for at XO. (BTW, XO's CEO, Carl Grivner Resigned today too.)

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It's about scale. (Says so in the press release and every analyst report.) Rob Powell thinks this integration will be "easy". One exec at Level3 called this merger "exciting" this morning. Does he realize the axe will have to fall a lot to reach those synergies? And morale is already taking a hit with channel personnel losses from Craig Schlagbaum and Scott Mull.