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CenturyLink Qwest Merger Gains Commission Approval

March 24, 2011
2011-04 UM 1484

Salem, OR.  Today the Oregon Public Utility Commission granted approval for the proposed merger of Qwest Communications with Louisiana-based CenturyLink.   The combined company will serve over 900,000 access lines in Oregon.
Oregon is the final state in Qwest’s 14-state territory to sign off on the merger. The Federal Communications Commission (FCC) gave its blessing earlier this week.
The Commission attached 55 conditions to its approval to ensure residential and business customers are not harmed from the merger. The conditions cover such areas as customer access to broadband, safety, service quality, financial reporting, access to records, and the timing of the change to a new Operations Support System.
Under the Commission conditions, over the next five years, CenturyLink will  spend $45 million to expand broadband capability in CenturyLink and Qwest areas.  CenturyLink will invest 25 percent of the money no later than December 31, 2012.
Neither CenturyLink nor Qwest can pass on costs related to the merger costs to its Oregon customers. The merged company agreed it will not seek to recover through customer rates any increases in overall management costs that result from the merger as well as any one-time costs for branding or transaction expenses.  The merged company will honor all promotional discount offers made by pre-merger Qwest to its residential and small business customers until the offers expire.
The Commission may expand on or modify its conditions based on the recent decisions issued by regulators in other states and the FCC. The Commission will take more time to review the conditions imposed in other states and by the FCC.
The Commission used the “in the public interest, no harm” standard to consider the transaction.  The Commission used the same standard to approve the merger of Verizon Northwest Inc. with Frontier Communications Corporation in 2010; and the merger of CenturyTel with Embarq in 2009.
The $22 billion transaction is a tax-free, stock-for-stock business deal with no new
debt or refinancing required. Upon closing, Qwest will become a wholly owned
subsidiary of CenturyLink. Shareholders of pre-merger CenturyLink will own
approximately 50.5 percent of post-merger CenturyLink and shareholders of the
pre-merger Qwest Communications will own approximately 49.5 percent of post-
merger CenturyLink.
The companies announced the merger in April of 2010.
Link to Commission Order: