Level 3 buying Global Crossing in latest telecom blockbuster

The $1.9 billion deal should result in stronger provider of enterprise services

Level 3 Communications has announced plans to buy fellow carrier Global Crossing in a stock deal worth about $1.9 billion that the companies say will bolster their enterprise service offerings.

The union of Broomfield, Colo.-based Level 3 and Bahama-based Global Crossing will create a carrier with combined revenue of about $6.26 billion and marks the second giant telecom merger to be announced in the past few weeks, with the proposed AT&T and T-Mobile deal announced in March. Level 3 will assume some $1.1 billion in debt as part of the agreement.

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The carriers between them own networks in 50 countries that reach to 70 countries. They've also been piling up big losses. Level 3 has reported quarterly losses for 2 straight years, and finished 2010 with a $622 million on revenue that declined from $3.76 billion to $3.65 billion. Global Crossing lost $170 million last year on revenue that climbed from $2.54 billion to $2.61 billion.

In making the announcement, Level 3 emphasized that Global Crossing will boost its enterprise service portfolio with managed services (including WAN optimization) and VPN offerings. 

Late last year Global Crossing bought out a company called Genesis Networks to expand its IP video network capabilities. 

Industry watchers have been urging Level 3 to buy Global Crossing for years, and rumors had been heating up again recently that a deal would happen.

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