CenturyLink Gets DOJ Nod For Level 3 Communications Asset Sale

CenturyLink, Inc. (NYSE:CTL) recently gained approval from the U.S. Department of Justice (DOJ) for the divesture of certain fiber network assets of erstwhile Level 3 Communications in Albuquerque, NM and Boise, ID.

CenturyLink had earlier inked an agreement with the DOJ for the sale of Level 3 Communications’ fiber network assets in Albuquerque, Boise and Tucson related to DOJ’s approval for the buyout of Level 3 Communications. We remind investors that on Nov 1, 2017, CenturyLink had completed the acquisition of Level 3 Communications.

CenturyLink plans to vend the assets in the Albuquerque area to Unite Private Networks and those in the Boise area to Syringa Networks. Headquartered in Kansas City, MO, Unite Private Networks is a leading provider of high-capacity, fiber-based communication networks. Syringa Networks is a fiber-optic network provider in Boise.

These divestitures will not affect pro-forma operating revenues and operating cash flow of the combined company. CenturyLink will continue serving all former Level 3 Communications’ customers unless they opt to be served by the buyer of the divested assets in each metro area.

CenturyLink will retain all its existing networks and business operations in these three metro areas. The company will continue to provide a full suite of telecommunications and data services to residential and business customers.

Per the previously outlined statutory decisions, the clause also stated that the combined company will divest 24 strands of dark fiber, which will connect 30 specified city-pairs across the country. Presently, the fibers are not used for any commercial purpose. Hence, this divestiture will not affect customers or services.

The sale is, however, subject to other governmental approvals, including the Federal Communications Commission and other customary regulatory closing conditions. The financial details of the deal have been kept under wraps.

Given this backdrop, we expect investor focus to remain on the outcome of the divestment. Meanwhile, details related to the approval for the sale of the assets in the Tucson area has not yet been revealed.

Zacks Rank & Stocks to Consider

CenturyLink is a Zacks Rank #4 (Sell) stock.

Better-ranked stocks in the broader Computer and Technology sector include United States Cellular (NYSE:USM) , Harris Corporation (NYSE:HRS) and Intel Corporation (NASDAQ:INTC) . While United States Cellular sports a Zacks Rank #1 (Strong Buy), Harris and Intel carry a Zacks Rank of #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The projected earnings growth rates (3-5 years) for United States Cellular, Harris and Intel are 1%, 6% and 8.4%, respectively.

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