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.
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.