CenturyTel buys bigger Embarq for a bargain

Taking advantage of current bargain-basement stock prices, rural phone company CenturyTel today purchased another company in the same category , Sprint spin-off Embarq, for $5.8 billion.

With more consumers now using wireless and cable services, rural phone companies are undergoing line losses.

As previously reported in BetaNews, telco giants such as Verizon have been selling off their landline services to smaller specialists over the past few years, focusing instead on new broadband offerings.

Some industry analysts now predict a wave of consolidation among these regional phone services. "We believe that this is just the first transaction in a wave of consolidation in the rural wireline sector," wrote Todd Retheimer, an analyst at SurTerre Research, in a research note Monday.

CenturyTel chose an opportune moment to acquire the larger Embarq. Like all too many other stocks these days, Embarq's shares have been tanking. Embarq's stock on Monday dropped to $28.28, the lowest level since Sprint's spin-off of the regional carrier back in 2006.

In launching Embarq earlier that same year, Sprint said that the spin-off would serve as the nation's fifth largest local communications company, based on its ownership of 7.4 million access lines as of September 2005.

Up until now, CenturyTel has serviced areas mostly in the South and Midwest, along with Las Vegas and parts of Colorado and the Northwest.

Combined with Embarq, CenturyTel is now expected to have about 8 million phone lines, mainly in rural communities.