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Level 3 ready to resume hunt for
acquisitions
The
By Andy
Vuong More than two
years removed from a spending spree that netted eight companies,
Broomfield-based Level 3 Communications is looking to jump back
into the acquisition fray in 2010, chief financial officer Sunit
Patel said Wednesday. From late 2005 to mid-2007, the
fiber-optic-network operator spent roughly $4 billion rolling up
firms ranging from smaller peer Broadwing to Internet
broadcaster Servecast. "We believe that the industry will
see more consolidation or M&A activity going forward," Patel
said. "We will continue to take a look at opportunities for
consolidation or acquisitions. Anything we do will be similar to
the kinds of things we've done in the past." UBS analyst John Hodulik noted in
January that Level 3 could return to acquisition mode after
refinancing bonds this year that had included stringent
covenants. Level 3 plans to grow its
large-enterprise and federal-government business, Patel said. One way to boost that segment would
be to acquire Qwest Communications' fiber-optic network and its
Networx business, which is part of a multibillion- dollar
program to upgrade communications systems for as many as 135
government agencies. Qwest shopped the network last year, and
Level 3 had been mentioned as a potential buyer. Also Wednesday, Level 3 said it
posted a net loss of $618 million, or 38 cents a share, for
2009, nearly double its loss from 2008, which had included a
one- time gain of $237 million from the sale of a distribution
business. Level 3 shares dropped 8 percent to
close at $1.27 Wednesday. Patel said Level 3 will boost its
capital expenditures this year. The company expects operational
expenses to also increase as it boosts its sales force and
support staff. JP Morgan analyst Mike McCormack
said he was cautious about Level 3's plans to ramp up spending,
"though the actions could position the company well for an
economic rebound." Andy Vuong: 303-954-1209 or avuong@denverpost.com
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