Is value finally to be found among bombed-out network operators?

Anointed and bankrolled by Warren Buffett and two other money managers,

Level 3 Communications

(LVLT)

says its ready to embark on a buying spree among the industry's troubled properties, a category to which it arguably belonged before Sunday.

Buffett's

Berkshire Hathaway

(BRKA)

, Memphis-based Southeastern Asset Management's Longleaf Partners Funds and Baltimore-based Legg Mason Funds Management agreed to spend $500 million on Level 3 convertible notes.

The debt is convertible into about 147 million shares, which would give the investors more than a quarter of Level 3's shares outstanding. All have indicated they'd be willing to invest more in the company.

Berkshire will buy $100 million of the notes, Longleaf $300 million and Legg Mason Funds Management, which Level 3's second-largest shareholder, $100 million. Level 3 soared 71% to $4.94 on the news.

Broomfield, Colo.-based Level 3 owns an 18,500-mile worldwide network of fiber optics that it markets mainly wholesale to about 2,000 customers, including regional Bell carriers, large Internet service providers and cable companies.

Level 3, which Buffett described as being possessed of both liquid resources and strong financial backing, apparently plans to use the money for acquisitions.

"It is widely recognized that the telecommunications industry is going through a period of unprecedented turmoil," said James Q. Crowe, Level 3's chief executive. "At the same time, however, the ongoing shakeout is creating extraordinary opportunities, as telecommunications companies, their network assets and customer bases become available. We are fortunate to have both network management expertise and financial dry powder, which will allow us to continue pursuing opportunities that create value for our stockholders."