CenturyLink Move to Buy Level 3 Called 'Shrewd'; Companies Defend Deal at FCC

from copper-based to fiber-based and wireless services, with about half its revenue "still legacy in nature" and declining, requiring "defensive" network investments, they wrote. Free cash flow is "deteriorating and will soon be barely sufficient to cover the dividend," they wrote: "Level 3 does not suffer from the same structural challenges as CenturyLink, and cost savings between the two businesses will be significant. This shrewd and well-timed acquisition will allow CenturyLink to stabilize its financial profile in the coming years and eliminate the risk of having to cut its dividend. CenturyLink had no choice but to do this deal, and ... it snagged Level 3 without overpaying." The companies defended their transaction at the FCC against criticism it would hurt competition (see 1702090035 and 1701240037). They expect further investigation to confirm that deal-specific enterprise services "are and will remain vibrantly competitive," said their filing in docket 16-403 on a meeting with an aide to Chairman Ajit Pai. On the long-haul side, they said there's competition from numerous providers with significant networks. "There is no basis to treat wholesale dark fiber as a separate product market from lit services," they wrote, saying the FCC "found it reasonable in the Verizon-XO transaction to conclude that a combined company will seek to maximize the return on its fiber facilities by selling both lit services and dark fiber to the extent it is efficient to do so."