• Bloomberg Businessweek, Monday, April 11, 2011 11:44 AM

To expand its network over three continents, broadband services provider Level 3 Communications has agreed to buy Global Crossing for about $1.9 billion. The value of the purchase is actually $3 billion, including the assumption of $1.1 billion in debt, the company said in a statement on Monday. It will also help reduce the pressure on prices, which have declined by as much as 30% a year in the industry, Donna Jaegers, an analyst at DA Davidson & Co., tells Bloomberg.

"This is what telecom has needed for a long time," said Jaegers. Citing the companies' joint statement, Bloomberg notes that the deal will combine two unprofitable companies with total revenue of $6.26 billion as of last year, and cut annualized capital spending by about $40 million. Level 3 lost $622 million last year and has been unprofitable on an annual basis since 1998. Global Crossing had a net loss of $172 million in 2010 and last turned an annual profit in 2003, the year it emerged from bankruptcy.

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