New company will have 2 million broadband subscribers
CenturyTel said today that it has acquired Embarq, the Kansas-based telecom provider that was formed when Sprint spun off its landline division in 2006.
CenturyTel is spending $5.8 billion to acquire Embarq, the Kansas-based telecom provider that was formed when Sprint spun off its landline division in 2006.
CenturyTel, a local exchange carrier and ISP that is based in Louisiana and that operates in 25 states, says merging with Embarq will give it a combined total of 8 million access lines, 2 million broadband subscribers and roughly 400,000 video subscribers. Additionally, the newly merged company would expand its reach to a total of 33 states, the company says. (See our slideshow of recent tech industry mergers and acquisitions.)
CenturyTel mostly specializes in delivering broadband Internet services to states in the Southeast and the Midwest, as well as to Northwestern states such as Washington, Oregon and Idaho. Embarq, meanwhile, offers a full range of telecom services in most of the states where CenturyTel currently operates, and also has a significant presence in East Coast states such as Virginia, North Carolina and Florida.
CenturyTel CEO Glen Post says merging CenturyTel and Embarq “makes great strategic sense,” because it “diversifies our revenues and provides us with expanded networks, expertise and financial resources to build long-term shareholder value.”
Telecom analyst Jeff Kagan says CenturyTel’s acquisition of Embarq is symbolic of changes within the local exchange carrier market, as more competitive local exchange carriers are looking more toward becoming ISPs or wireless voice providers.
“The local phone business is changing,” he says. “It is no longer about local phone lines, instead it is about high speed data and DSL lines and wireless phone service. These carry voice and bring so much more to the picture. Traditional local phone lines are a shrinking part of the business, but the local phone companies are expanding into so many new areas of growth.”
CenturyTel says the merger is still subject to regulatory approvals and that it expects to close the transaction by the second quarter of 2009.
