Qwest headquarters in Denver, Colo. Photo by Joey Vigil

US telecommunications and data center services provider Qwest has entered into a definitive agreement with telecommunications company CenturyLink (formerly CenturyTel), whereby CenturyLink will buy the company in a stock-for-stock transaction, valued at about $10.6 billion.

The deal, which remains subject to approval by both companies' shareholders, will expand CenturyLink's reach into enterprise services market in addition to making it one of the largest local phone service providers in the US.

Qwest is a major provider of connectivity services to data centers and operates 17 data centers of its own, which it uses to provide colocation, hosting and managed services.

"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," CenturyLink CEO and President Glen Post said in a statement.

"The combined company's highly recognized national network will significantly expand our ability to deliver strategic and customized product and service solutions to our business, wholesale and government customers throughout the country."

If the deal closes, Qwest shareholders will be receiving CenturyLink stock equivalent to $6.02, or about a 15 percent premium over Qwest's closing stock price on April 21, 2010.

Once the deal is closed, the companies expect CenturyLink shareholders to own about 50.5 percent and Qwest shareholders to own about 49.5 percent of the combined company.

The buyer expects the merger to add about $625 million to its annual revenue.

As part of the transaction, CenturyLink will assume Qwest's outstanding debt of $11.8 billion.

The combined company's network will consist of 173,000 miles of fiber.

Together, the two companies serve local markets in 37 states, comprised of about five million broadband customers, 17 million access lines, 1,415,000 video subscribers and 850,000 wireless customers.

The companies expect to close the deal by July, 2011, upon receiving all regulatory approvals, including one from the US Federal Communications Commission and several state public-service commissions.