Level 3 To Buy WilTel
Level 3 Communications Inc. has agreed to acquire the second generation of the broadband company known as WilTel Communications Group for $680 million.
November 1, 2005
![Network Computing logo Network Computing logo](https://eu-images.contentstack.com/v3/assets/bltde8121fc52c5c8f3/blt3f3d0318f746b1c2/65a530e4187606040a1d8b8c/placeholder.png?width=1280&auto=webp&quality=95&format=jpg&disable=upscale)
BROOMFIELD, Colo. — Level 3 Communications Inc. has agreed to acquire the second generation of the broadband company known as WilTel Communications Group for $680 million.
The original WilTel, spun from Williams Companies (Tulsa, Okla.), built one of the first U.S. broadband fiber networks in the late 1980s, and became a pioneer in frame-relay services.
Level 3 is acquiring WilTel from Leucadia National Corp., a New York-based financial conglomerate which picked up controlling interest in WilTel in 2003.
Level 3 is offering $370 million in cash and 115 million shares of stock in a deal that will give the company 3,000 more route miles of backbone, and an existing contract WilTel holds with SBC Communications Inc. Also included in the deal is WilTel’s video services subsidiary, Vyvx. The deal does not include WilTel’s headquarters, or $358 million in debt.
In its first generation, WilTel spun off from Williams Pipe in the late 1980s, making use of a special oil pipe cleaning machine invented by Williams that drew fiber cable throughout the petroleum distribution network of the parent. WilTel used the fiber to offer physical-layer services, and also hired an engineering team that pioneered frame relay in the early 1990s. It was one of the first to launch Asynchronous Transfer Mode in 1993.In 1994, LDDS WorldCom (later MCI WorldCom) paid Williams $2.56 billion for WilTel. The deal gave WorldCom access to networks and services, but did not include Vyvx. Williams signed a three-year non-compete clause, but spent those years building up the Vyvx business and gaining new fiber routes.
In 1998, Williams Communications Group was formed, eventually switching its name back to WilTel.
After spinning out from the parent Williams Group and gaining initial interexchange carrier success at the end of the decade, WilTel was caught in the telecom crash of 2001. It emerged from bankruptcy in October 2002, and Leucadia increased its financial stake over the next year.
Level 3, one of the industry's first fiber-backbone carriers, managed to keep business stable during the recession. Its engineering staff has remained in IP traffic management forefronts during the recession, taking a lead in advancing the Multi-Protocol Label Switching standard. Nevertheless, the continued flatness of long-haul service cut profitability. The WilTel acquisition gives Level 3 more stability for survival, said Chief Operating Officer Kevin O’Hara.
You May Also Like
Maximizing cloud potential: Building and operating an effective Cloud Center of Excellence (CCoE)
September 10, 2024Radical Automation of ITSM
September 19, 2024Maximizing Manufacturing Efficiency with Real-Time Production Monitoring
September 25, 2024