North Olympic Peninsula customers of CenturyTel Inc. and Qwest Communications International Inc. will likely see no significant changes after a merger, according to representatives of both telecommunication companies.
“It could just be the name changes, or a change in what they offer a little bit,” said Qwest spokesman Bob Gravely. “But I wouldn’t expect any significant changes.”
CenturyTel spokeswoman Lisa Willis said the only change for customers may be more service.
“I would say it will most likely enhance coverage area,” she said.
CenturyTel Inc., the country’s fifth-largest local-phone company, said Thursday that it will buy Qwest Communications International Inc., the third-largest, in a stock swap worth $10.6 billion to gain the benefits of scale in a shrinking business.
The companies — which announced the pending deal Thursday — are the only providers of landline phone service on the Peninsula — with CenturyTel largely serving the Forks-West End-Northwest Coast and the Quilcene areas, and Qwest providing service in most of the rest of Clallam and Jefferson counties.
They also provide broadband Internet service.
Gravely said the merger will become final sometime in the first half of 2011.
The deal is intended as a means to cut costs in response to the declining landline markets.
The number of landlines in the U.S. shrinks by about 10 percent per year as consumers increasingly rely more on wireless phones and cable companies.
It will give CenturyTel, a rural phone company based in Monroe, La., a chance to cut overlapping functions while owning the same number of phone lines operated by Denver-based Qwest eight years ago.
The combined company would have about 17 million phone lines in 37 states.
The new company does face a challenge in that neither Qwest nor CenturyTel own wireless networks that can compensate for the loss of landlines.
Glen Post, CEO of CenturyTel, said the combined company may also provide TV services over phone lines to compete more aggressively with cable.
Qwest provides traditional phone service in 14 mostly Western states. Originally a long-distance and Internet service provider, it bought US West in 2000 in a process that started as a hostile takeover.
US West was one of the seven “Baby Bells” formed when the federal government broke up the AT&T monopoly in the 1980s.
The US West deal and accounting shenanigans in the following years left Qwest struggling under a heavy debt load.
Though it has managed to shore up its finances substantially in recent years, it was still an unlikely acquirer.
CenturyTel, on the other hand, has an investment-grade credit rating, giving it the flexibility to buy the larger Qwest.
It was not part of the original AT&T system, and it has expanded by buying up other, mostly rural, independent phone companies.
Last year, it bought Embarq Inc., the landline service company once part of Sprint, giving it an urban presence as well.
To reflect that deal, CenturyTel now does business as CenturyLink.
It provides service in 33 states, but its presence is small in most of them.
It is biggest in Florida, Nevada, North Carolina, Missouri, Texas, Virginia and Wisconsin.
CenturyTel’s Post said it had not been decided which brand would be used after the acquisition, but he said he’s leaning toward using “CenturyLink” for the consumer business and perhaps including the “Qwest” name when marketing to businesses.
Qwest shareholders would own 49.5 percent of the new company, while CenturyTel stockholders would own 50.5 percent.
Qwest stockholders would receive 0.1664 CenturyTel shares for each share they own.
The deal will be reviewed by the Federal Communications Commission and either the Justice Department or the Federal Trade Commission. State telecommunications regulators will also examine the transaction.
