Level 3 to acquire Global Crossing for $2 billion

WASHINGTON — Level 3 Communications Inc. said Monday that it is buying Global Crossing Ltd. for $2 billion, joining two major long-distance telecommunications networks that carry massive amounts of Internet and other data traffic in the U.S. and internationally.

Both Level 3 and Global Crossing operate vast networks of optical fiber used by other telecom carriers, corporations and government agencies. The combined company's reach would extend to 70 countries on three continents.

Kreifeldt said the acquisition of Global Crossing will help Level 3 gain scale, enabling it to put more traffic over its networks.

It will as well let Level 3 expand its geographic reach. Both companies already operate in North America and Europe, however Global Crossing gives Level 3 a strong presence in Latin America and supplements its networks in Britain - particularly in cities in both markets.

In addition, the purchase of Global Crossing brings Level 3 several new businesses, including data center operations and "cloud computing" services, which deliver software, data storage and other services over the Internet.

ST Telemedia bought Global Crossing out of bankruptcy protection in 2003, paying $250 million for 61.5 percent of a company that had declared $22 billion in assets in its 2002 bankruptcy. It was, then, the largest telecommunications bankruptcy ever. The Singapore firm as well gave Global Crossing $200 million to pay creditors.

The Internet boom of the late 1990s

Like other victims of the Internet boom of the late 1990s, Global Crossing had overinvested in optical networks, expecting traffic to grow much faster than it to tell the truth did.