On paper, the Denver metro area lost a corporate headquarters address — and one of its spots on the Fortune 500 — when Louisiana-based CenturyLink Inc. bought Broomfield-based Level 3 Communications last fall.
But in practice, that hasn’t meant what it usually means.
Typically, when a local business is bought by a larger out-of-state company, the local headquarters is gutted and replaced by far-away management. But this time, in many ways, the reverse has happened.
Instead, the $24 billion deal makes CenturyLink (NYSE: CTL) look much more like a Colorado company. And the structure of the post-merger business placed four of the giant telecom’s five consumer-facing lines of businesses under management of executives who either came from Level 3 or are now in Colorado or both.
On top of that, Jeff Storey, who was CEO of Level 3, became president and COO of CenturyLink in the deal. And on Jan. 1 of next year, Storey will succeed Glen Post III, who oversaw the company’s rise to be the third-largest telecom in country, as chief executive.
Once that happens, the executive ranks of CenturyLink will be split between metro Denver — mostly at the former Level 3 headquarters campus — and CenturyLink’s campus in Monroe.
Storey says he is not moving when he becomes CEO. “I’ve always been really clear about that,” he said.
But people at CenturyLink in Monroe — a humid northern Louisiana city of 50,000 in a metro area of 200,000, far from other population centers — aren’t giving up on the idea Storey might relocate, and he still gets asked about it a lot when he’s in Monroe, he said.
“People always ask, ‘When are you moving to Monroe?’” Storey said with a chuckle, “and that’s how they ask it — ‘when’ and not ‘if’.”
The acquisition created an international telecom with fiber optic networks that stretch more than 450,000 miles. It connects more than 100,000 office buildings in U.S. cities to high-speed data lines.
The company employs about 60,000 people worldwide, post-merger, nearly 8,000 of them in Colorado.
The company has three campuses in the metro area — in Broomfield as well as in Douglas County and Littleton — and an office tower in downtown Denver.
Of 15 top executive positions at CenturyLink, seven are either from Level 3 or now work from its former headquarters in Broomfield. Once Post retires, the executives’ home bases will be split evenly.
Not like the Qwest deal
That’s a stark difference from what happened following CenturyLink’s 2011 purchase of Denver-based Qwest Communications, which had been the Rocky Mountain region’s local phone company.
Losing that headquarters meant the loss of thousands of Denver-area jobs as the company eliminated redundant corporate positions, moved leadership posts to Monroe and downsized along with its shrinking landline phone business.
Most of the Qwest executives who remained after CenturyLink took over didn’t stay long.
The Level 3 merger looks much different.
CenturyLink was the official acquirer, but the deal was close to a 50-50 merger in terms of ownership.
Under the post-merger structure, the majority of CenturyLink’s day-to-day operations of its business are managed by executives based in Colorado.
Three out of five presidents running CenturyLink divisions are based from the former Level 3 headquarters in Broomfield, where Storey; CFO Sunit Patel;and Shaun Andrews, executive vice president in charge of product, also are based.
A fourth business-unit president, Edward Morche, who runs CenturyLink’s services to federal government agencies and related companies, also came from the Level 3 side of the merger, but he is based in the Washington, D.C., area.
The lone business-unit president at CenturyLink’s Monroe headquarters, Maxine Moreau, runs its consumer markets business, which encompasses CenturyLink’s local phone, internet and TV services.
‘A second center of leadership’
There’s a bit of sensitivity about the topic of where he’ll live, Storey admits.
Corporate services are still largely based in Monroe, and the company’s headquarters isn’t changing.
“We’ll stay there,” Storey said.
CenturyLink employs 2,150 people at its Monroe headquarters. Nine of the company’s 13 board seats are held by directors who came from pre-merger CenturyLink.
The city has been a great place for hiring and attracting talented workers for the company, Storey said.
How CenturyLink operates will be unchanged by having its CEO living in Colorado.
“As both Jeff and Glen have said, when you’re a CEO of a global company, you’re traveling most of the time, so it really doesn’t matter where you’re based,” said Laurinda Pang, CenturyLink’s president of international operations and global accounts, in an email.
“What is important to us is that we have the right people in place, wherever that may be, to help us achieve our goal of building the world’s best enterprise networking company focused on delivering a differentiated customer experience and profitable growth,” she said.
But where the CEO works does matter.
CenturyLink is effectively committing to Colorado in choosing Storey and having its top executive based here, said Phil Weiser, director of the Silicon Flatirons at the University of Colorado Boulder, a center that studies telecom policy and entrepreneurship.
“The CEO of any company creates a center of gravity. Even if the headquarters remain in Louisiana, Jeff and other top executives will be in Colorado and will create, in effect, a second center of leadership here,” Weiser said.
That should be good for the state and the company, he said, and help CenturyLink recruit telecom talent that might not be willing to move to Monroe.
“Colorado has a reputation and a tradition of top-level telecom leadership, which it will continue to maintain,” he said.
The prominence of Level 3 executives in post-merger CenturyLink makes sense.
Following the merger, more than three quarters of CenturyLink’s $24 billion annual revenue comes from business-to-business data services, not from the residential phone business that were CenturyLink’s origins.
Trying to stay an upstart
CenturyLink became a major player in business telecom services with its acquisitions of Overland Park, Kansas-based Embarq (the spun-off landline business of Sprint) in 2009 and Denver-based Qwest in 2011.
When it acquired Level 3, it gained a company focused on owning and running data networks and services for businesses.
Level 3 itself was the product of a series of mergers consolidating telecom in the wake of the 2001 industry bust. Level 3 bought more than two dozen companies, the last of which was Douglas County-based TW Telecom, which brought the company hundreds of local employees.
Those services now are what drive CenturyLink’s profit as consumers flee traditional landline telephone service and, increasingly, drop internet services delivered over their phone lines, too.
Storey, an engineer by training, started out in the local phone business of Southwestern Bell just as it became a independent regional phone business in the 1984 breakup of the original AT&T.
In the 1990s he took a job with Atlanta-based cable TV company Cox Communications Inc. just as the cable industry was embracing internet technologies and competing evermore directly with Baby Bells and other local telecoms.
The cable industry culture was different, Storey recalled.
It didn’t have regulatory protection and evolved by battling broadcast television and phone companies to survive. There was more talk about doing things for customers in his stint at Cox than he’d heard over the entire 10 years in the local phone business.
Storey said he’s remembered that as he rose through the ranks of business-to-business telecom, becoming CEO of Tulsa-based WilTel and then, after 2008, president and COO of Level 3 prior to becoming its CEO in 2013.
CenturyLink doesn’t think of itself as a traditional local phone business, either, he said.
“We’re trying to stay that upstart competitor,” Storey said. “We’re trying to use to technology to solve problems for customers.”