NEW YORK (CNNMoney.com) -- In one of the largest telecommunication mergers in years, CenturyTel Inc. announced Thursday it will acquire Qwest Communications in a $10.6 billion all-stock transaction.
The combined companies will have operations in 37 states providing land line, broadband and video services on a 173,000-mile fiber network, the companies said.
Under the terms of the deal, Qwest shareholders will receive 0.1664 CenturyTel shares for each share of Qwest common stock they own. Based on Wednesday's closing price, Qwest shareholders will get the equivalent to $6.02 per share of CenturyTel stock, a 15% premium.
Including $11.8 billion of Qwest debt, the merger has an enterprise value of $22.4 billion, the companies said. The deal is expected to result in $625 million of cost savings.
"This combination will enhance our ability to deploy innovative IP products and high-bandwidth services to business customers, expand broadband availability and speed to consumers, and offer superior, differentiated video products," Glen Post III, CenturyTel's chief executive officer, said in a statement.
The merger comes as both companies struggle to compete with larger telecom companies such as AT&T (T, Fortune 500) and Verizon (VZ, Fortune 500).
In addition to 5 million broadband customers, the companies boast a combined 17 million access lines, 1.4 million video subscribers and 850,000 wireless users.
"We look forward to becoming part of a larger company with a strong financial profile," Edward Mueller, Qwest's chief executive officer, said in a statement.
When the deal closes, CenturyTel (CTL) shareholders are expected to own about 50.5% of the company, while Qwest (Q, Fortune 500) shareholders will control about 49.5%. 
| Index | Last | Change | % Change |
|---|---|---|---|
| Dow | 32,627.97 | -234.33 | -0.71% |
| Nasdaq | 13,215.24 | 99.07 | 0.76% |
| S&P 500 | 3,913.10 | -2.36 | -0.06% |
| Treasuries | 1.73 | 0.00 | 0.12% |
| Company | Price | Change | % Change |
|---|---|---|---|
| Ford Motor Co | 8.29 | 0.05 | 0.61% |
| Advanced Micro Devic... | 54.59 | 0.70 | 1.30% |
| Cisco Systems Inc | 47.49 | -2.44 | -4.89% |
| General Electric Co | 13.00 | -0.16 | -1.22% |
| Kraft Heinz Co | 27.84 | -2.20 | -7.32% |
|
Bankrupt toy retailer tells bankruptcy court it is looking at possibly reviving the Toys 'R' Us and Babies 'R' Us brands. More |
Land O'Lakes CEO Beth Ford charts her career path, from her first job to becoming the first openly gay CEO at a Fortune 500 company in an interview with CNN's Boss Files. More |
Honda and General Motors are creating a new generation of fully autonomous vehicles. More |
In 1998, Ntsiki Biyela won a scholarship to study wine making. Now she's about to launch her own brand. More |
Whether you hedge inflation or look for a return that outpaces inflation, here's how to prepare. More |
