The value crowd's favorite telecom revival story, Level 3 (LVLT) , is getting bigger again, if not more profitable. And this deal even fits with the company's core business.

Spicing up a slow Thanksgiving eve in the market, Level 3 agreed Wednesday to acquire

Genuity's

operations for $242 million. As part of the accord, cash-strapped Genuity filed for Chapter 11 bankruptcy protection, listing roughly $2 billion in assets and some $4 billion in liabilities.

Buying Genuity will help Bloomfield, Colo.-based Level 3 beef up its struggling Net wholesaling business. The deal also gives Level 3 a greater share of the dial-up Internet business and a large portion of the

AOL

(AOL)

traffic that it didn't already have.

In that regard, the latest deal, which was duly blessed by Genuity partners and creditors, including giant Bell

Verizon

(VZ) - Get Report

, marks a departure for Level 3. The company has been on the rebound this year despite a tough year in the telecom business, having gained the stamp of approval of billionaire value investor Warren Buffett. Level 3 shares have more than doubled off their 52-week low and rose 41 cents Wednesday to close at $5.60.

But in staying a step ahead of its creditors, Level 3 made two previous acquisitions primarily to acquire revenue, keeping the company in the good graces of its lenders. The two prior deals had Level 3, a telecom wholesaler formed in the 1990s, making a plunge into the barely profitable business of distributing software.

Through the acquisition of software resellers CorpSoft last year and Software Spectrum this year, Level 3 tripled its revenue levels and avoided violating its credit agreements. Those buys allowed the company to avoid the same financial fate as its failed wholesale peers

Williams Communications

and

Global Crossing

.

But while the acquisitions made Level 3 one of the nation's largest software resellers, the paper-thin margins from mailing and delivering software did little to lift the company out of its longstanding pool of red ink. And the Genuity deal, while closer to home for the closely watched telco, will hardly help the company print money any time soon.

Indeed, Genuity -- a cash incinerator of no small magnitude itself -- reported a first-quarter loss of $257 million on revenue of $280 million. In other words, the company was losing nearly almost a dollar for every $1 in sales it brought in.

Earlier this year, Level 3 was losing $3 for every $1 of revenue. But in July, the telco cum software reseller

sold $500 million worth of convertible bonds to a group of investors led by Bill Miller's Legg Mason funds and

Berkshire Hathaway

(BRK.A) - Get Report

. The deal gave Level 3 some much-needed cash. Moreover, the backing of Buffett gave the company a high profile, and it soon vowed it would be an acquisitive survivor in the current telecom meltdown.

On Wednesday, Level 3 lived up to at least the acquisitive part of that promise.

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