Reach acquires Level 3’s Asian business

Level 3 Communications said today that Reach will acquire its Asian business assets, including the North Asian cable system (Tiger) and capacity on the Japan-US Cable System.

As a result of the deal, Level 3 also will take a one-time charge of about $500 million on its fourth-quarter earnings.

Reach, a joint venture between Pacific Century CyberWorks and Telstra, also will acquire Level 3’s data centers in Hong Kong and Tokyo and existing customers on Level 3’s Asian network.

Level 3 said it was shedding its Asian assets because it would require “significant additional capital investment to get to the point of free cash-flow breakeven,” according to a statement from James Crowe, Level 3 CEO.

As part of the deal, Level 3 will provide capacity and services to Reach over Level 3’s North American backbone network, and Level 3 will buy capacity and services from Reach in Asia.

--Vince Vittore, executive editor