In announcing its plans to form a combined company with more than $6 billion in revenue, Level 3 said that it would be "expanding geographic reach" and offering "an extensive portfolio of transport, IP and data solutions, content delivery, , collocation and voice services." The company's IP networks will deliver services to 70 countries and will be able to achieve cost savings of about $300 million per year, company officials said.

Gartner analyst Daniel O'Connell says Level 3 will benefit substantially from Global Crossing's presence around the world.

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"Global Crossing has a particularly good presence in Latin America," says O'Connell, who notes that the carrier has a total of 14 data centers in Latin America, including in major cities such as Rio de Janeiro, Sao Paulo, Santiago and Buenos Aires. "They have a pretty deep set of services based in the United Kingdom and there are other kinds of European and Asia-Pacific markets that Level 3 gets out of this. ... Both companies have been trying to move up the value chain, so this is one of those consolidations we have expected."

Sandra Palumbo, a Yankee Group analyst, said the long-anticipated deal gives Level 3 and Global Crossing more of a fighting chance against other big carriers as consolidation continues. Both companies have struggled since the Internet bubble burst and they combined for about $800 million in losses last year, but their proposed union gave Wall Street something to cheer about Monday as stocks of both companies soared.