The proposed $5.8 billion buyout of Embarq Corp., the dominant local phone company serving Southern Nevada, will not affect rates customers pay for basic telephone service, state consumer advocate Eric Witkoski said today.
The Nevada Legislature set rates for Embarq when it enacted a law during its 2007 session. So Witkoski said he is mainly concerned that Monroe, La.-based CenturyTel, which agreed Monday to buy Embarq, maintain the same quality of service.
CenturyTel needs approval from the Public Utilities Commission before taking over the Southern Nevada operations where Embarq employs 1,100 workers.
It would be the second corporate change for Embarq workers since 2006 when Sprint Nextel Corp. spun off Embarq.
The International Brotherhood of Electrical Workers local 396 is reviewing the proposed merger to determine how it will affect its 800 members at Embarq in Las Vegas, said IBEW business manager Charlie Randall.
Workers already are nervous at Embarq, he said, because the company was planning to lay off 50 workers. Embarq told him Monday that the layoffs are on hold because of the merger agreement, Randall said.
CenturyTel is offering to swap its stock for Embarq shares, valuing the Embarq shares at $40.42 or a 36 percent premium to Embarq’s closing price Friday. CenturyTel also would be assuming $5.8 billion in debt at Embarq.
“In addition to bringing together complementary assets, geographic coverage and outstanding employees, this combination unites two very similar corporate cultures that share a strong commitment to our customers, employees and communities,” Embarq spokeswoman Vicki Soares said in a statement.
“This increases CenturyTel’s exposure to some difficult economic environments like Las Vegas and Florida, markets that have been a little more hard hit than they’re used to serving,” Chris King, an analyst with Stifel Nicolas & Co. told Bloomberg News.
Embarq operates also in North Carolina, Ohio, Texas, Virginia and Pennsylvania.
In Southern Nevada, cable television company Cox Communications has become a major competitor of Embarq for phone service. Cox offers telephone service to business and residential customers throughout the Las Vegas metropolitan area except Boulder City, where it intends to start serving later, said Cox spokesman Juergen Barbusca.
In addition, Cox reported Monday that it intends to begin offering wireless service although a spokeswoman said Cox hasn’t disclosed when it might start offering mobile phone service. Embarq also sells wireless phone service.
Embarq share increased 64 cents or 2.15 percent to $30.38 on the New York Stock Exchange. CenturyTel Shares dropped $3.88 or 13.15 percent to $25.62 on the New York Stock Exchange.
Contact reporter John G. Edwards at firstname.lastname@example.org or 702-383-0420.