PSN supplier Global Crossing acquired by Level 3

Global Crossing customers warned the takeover could lead to short-term disruption to projects

Public sector network (PSN) provider Global Crossing has been acquired by communications company Level 3 in a deal worth $3bn (£1.8bn).

Global Crossing was the first telecoms company to work with the UK government on providing connections to the PSN through the Early Adopter Pathway project announced late last year.

Level 3 said the acquisition will offer enterprises and governments a more comprehensive portfolio of data, video and voice solutions.

"This is a transformational combination that we believe will deliver significant value to the investors, customers and employees of both Level 3 and Global Crossing," said Jim Crowe, chief executive officer of Level 3.

Both companies will see increased geographic reach throughout North America, Latin America and Europe, connected by extensive global subsea networks.

Gartner analyst Neil Rickard said the merger is likely to be a good thing for the future of Global Crossing, but UK-based enterprise customers of the company should be concerned about short-term projects.

"On the one hand, this is a positive move for Global Crossing in terms of increased scale in an international setting," said Rickard.

"Although it is one of the major players in the UK, Global Crossing is a relatively small provider elsewhere. It is now substantially bigger, and for its corporate future, this is a good thing for the company," he said.

"There is, however, a potential negative impact for UK-based customers in the short term. Level 3 principally operates in the wholesale market and doesn't have much experience of providing services to the enterprise," said Rickard.

"As a result, there is a risk of short-term disruption to enterprise Global Crossing projects expected to be delivered in the next 12 months, while things are tidied up in the acquisition," he added.

"Hopefully, Level 3 will let Global Crossing take the ball with those, but customers expecting product rollouts in the next year or so should definitely check if plans have changed.

"However, the PSN is a long-term project and consequently should remain unaffected by this announcement."