Level 3 said the agreement makes it one of the primary providers of Microsoft's broadband services. MSN has agreed to route a hefty chunk of its traffic through Level 3's network.
The company is a provider of fiber-optic networks for use in the high-speed delivery of content and applications.
Under the three-year agreement, Level 3 intends to provide its CrossRoads Internet access service in North America for six properties in the MSN network of services including Hotmail and MSN Messenger.
The deal gave a much-needed lift to Level 3's sagging stock price. Shares closed up 50 cents, jumping nearly 11 percent, to $5.20. The company has recently been trading in low single digits, flirting with its 52-week low of $3.75.
Terms of the deal were not disclosed.
The agreement with Microsoft comes as Level 3 struggles to survive the economic downturn. The company, based in Broomfield, Colo., last week announced layoffs and a massive overhaul to its financial projections. Level 3, which has been stumbling for some time, hopes its revisions will cut expenses by about $2.3 billion until it reaches breakeven on an operating basis.