CenturyTel to buy Qwest for $10 billion

NEW YORK — CenturyTel Inc., the country's fifth-largest local-phone company, plans to buy the third-largest, Qwest Communications International Inc., in a stock deal worth more than $10 billion so the companies can try to better deal with the dark future of the landline phone business.

Qwest has more than 680,000 access lines and about 2,200 employees in Utah with a total annual payroll of $134.7 million in the state, according to the companies' website about the merger.

Qwest spokesman Mark Molzen told the Deseret News that job cuts will be one result of the transaction.

"As with any merger or acquisition, the transaction is expected to generate synergies, including reduction of corporate overhead and duplicate functions, as well as operational efficiencies," Molzen said. "There will be reductions, though it is too early to determine how many. Both Qwest and CenturyLink have a culture of treating employees fairly, and this will be the culture of the new company."

He added that customers will benefit from the sale.

"Until the merger closes, in the first half of 2011, it's business as usual," he said. "That means we're focused on perfecting the customer experience. In the long term, after the transaction is approved and closes, CenturyLink's and Qwest's states, cities and communities will benefit from a financially stronger company and one that is well positioned to roll out innovative products and services."

The number of landlines in the U.S. shrinks by about 10 percent per year as consumers increasingly rely on their wireless phones or service from cable companies. That means a major challenge for phone companies is cutting their costs to keep pace with their dwindling business.

Buying Qwest could give CenturyTel a chance to cut overlapping functions like billing, administration, call centers and back-end services. Other phone companies, mainly rural ones, are also merging for the same reasons.

In a sense, the deal is a way to return to the scale phone companies had before wireless started eviscerating the business. If they combined today, CenturyTel and Qwest would have the same number of phone lines Qwest did on its own eight years ago.

The combined company would have about 17 million phone lines serving customers in 37 states. It would be based at CenturyTel's headquarters in Monroe, La., rather than in Denver, where Qwest is based.

The deal was valued at $10.6 billion when it was announced Thursday, but a decline in CenturyTel's stock price Thursday knocked the value down to $10.3 billion.