Level 3, TW Telecom adjusting nicely

July 24, 2015

Denver Business Journal

Nearly nine months after Level 3 Communications Inc.acquired TW Telecom, the company has been relatively quiet.

Aside from some expected layoffs eliminating overlapping positions, things have gone smoothly following the huge merger. Level 3 has announced new technology rollouts and in the spring forged new networking agreements with major consumer telecoms such as AT&T and Verizon.

There have been no major surprises in the early months of folding the businesses together, said Laurinda Pang, chief administrative officer for Level 3, who oversaw the integration process.

The two business-to-business telecoms were familiar to each other and executives on the integration team started planning to blend the businesses months before the deal closed. But creating a new Level 3 out of the best of both company cultures is far from over.

“The hard part with anything this large is the culture and creating an environment where everyone feels part of the new company,” Pang said. “We’re looking to build something for the future rather than just integrate two companies.”

Level 3 (NYSE: LVLT) bought TW Telecom in a $5.3 billion deal that closed in October, creating a company with 4,000 Colorado employees and about 13,600 worldwide. Level 3 kept both companies’ major Colorado campuses: Level 3’s in Broomfield and TW Telecom’s in Douglas County.

Jeff Storey, Level 3 CEO, said during a May talk at the University of Denver’s Daniels College of Business that company culture is critical because every day Level 3 employees have the opportunity to leave for another job, especially given the in-demand technical skills most of them have.

The trick in integration is getting employees comfortable enough in the new organization to take the little risks necessary to improve a business, said John Blount, former TW Telecom COO, who’s now in charge of Level 3’s North American and Asia-Pacific operations.

Level 3’s leadership emphasized transparency early on, having top executives outline their thinking to TW Telecom employees to tamp down rumors while encouraging people to speak up and make suggestions.

Having been hurt a decade ago by difficulties folding in newly-bought companies from smaller deals, Level 3 invested more heavily in making the TW Telecom successful than a less experienced company might have, Pang said.

A lot of companies undertaking mergers don’t put their best-performing people on the team in charge of integrating the businesses for fear it will hurt operations at a critical time, Pang said. But that’s the reverse of what Level 3’s experience suggests they should do, she said, because getting integration right ensures the health of the new business going forward.

“The ‘A players’ belong on the integration team,” Pang said. “They know the business and its role with customers better than anyone else.”