BROOMFIELD, Colo. ( TheStreet) -- Level 3 Communications ( LVLT), a Web hosting firm, has confirmed that it has clinched a major deal with Netflix ( NFLX - Get Report) after intense speculation about a partnership prompted a frenzy of activity in the company's shares.

Trading in Level 3's stock was halted due to a circuit breaker on Tuesday as investors reacted to the Netflix chatter. The company's stock surged 15 cents, or 16.95% to $1.03, shortly after trading resumed.

"I can confirm that we have been awarded a deal with Netflix," a Level 3 spokeswoman told TheStreet. Level 3 referenced a large, unnamed, content delivery network (CDN) customer on its recent quarterly conference call, prompting speculation that the company was working with Netflix again.

The Level 3 spokeswoman also confirmed that the company was referring to Netflix during its conference call. Revenue from the Netflix contract is expected to ramp up in 2011. Level 3 also put out a news release recently saying that it added 1.65 terabytes per second of capacity to its CDN network in the third quarter, which is clearly in anticipation of Netflix traffic.

There has also been talk that Level 3 regained its Netflix deal at the expense of rival Akamai ( AKAM - Get Report) , although an Akamai spokesman told TheStreet that Netflix remains a customer. "It has been widely reported that Netflix has a multi-vendor strategy," he said. Recent stories that Netflix suffered poor performance on the Netflix network are "simply untrue," he added.

Shares of Akamai, which is one of TheStreet's top Web stocks, fell $2.50, or 4.62%, to $52.64 on Tuesday, outpacing the modest decline in tech stocks that saw the Nasdaq dip 0.36%.

--Written by James Rogers in New York.

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