Qwest's "Billion-dollar opportunity"
CEO Ed Mueller says only 32 percent of broadband customers in the 23 markets Qwest serves get it from the Denver-based provider, which also seeks partnerships to improve wireless business.
By Kimberly S. Johnson
Denver Post
Tuesday, February 26, 2008

Qwest chief executive Ed Mueller said Monday that the company intends to leverage new and existing partnerships to boost its revenues.

"We need partners to help us do this.  We can't do this alone," he said at a meeting with analysts in New York.

Mueller spoke about changes he is considering to Qwest's wireless partnership with Sprint Nextel and about his commitment to spend millions to improve Qwest's broadband network.

"We have a hole in wireless," he said.

Currently, Qwest purchases wireless minutes from Sprint at a wholesale rate but must also team up separately with a handset manufacturer for phones.  That means customers don't get the newest phones on the market.

A new partnership, possibly with AT&T, Verizon or Sprint, would give customers better deals and give Qwest a revenue boost.

Mueller said Qwest's 14-state territory covers 11 percent of the country, making it attractive to other wireless providers.  Right now, Qwest has 824,000 wireless customers.

The market responded positively to Mueller's remarks, with Qwest shares up 33 cents, or 6 percent, to $5.60 on Monday.  The stock, however, remains down from the more than $8 a share it traded at in August when Mueller took over after the departure of former CEO Dick Notebaert.

Two analysts gave Mueller different reviews.

"It was a very good presentation.  (Mueller) came off very well," said Patrick Comack, an analyst at Zach ary Investment Research, who attended the meeting.

But telecom analyst Jeff Kagan, who listened to the meeting online, said he wanted more specifics about the company's strategy.

"He didn't say where the company was heading," Kagan said.  "There were a lot of hopes and dreams."

Comack said one of the company's problems is that it has a small share of the large business-enterprise market and has performed poorly in the sector.

Mueller said new Networx contracts to serve federal agencies should help that sector when they begin to pay off in 2009.

Enhancing Qwest's broadband network could provide "a billion-dollar opportunity," Mueller said, if Qwest can take market share from its competitors.

He also said Qwest plans to buy back shares and use cash to pay down debt and pay its dividend.

Kimberly S. Johnson: 303-954-1088 or kjohnson@denverpost.com

http://www.denverpost.com/business/ci_8362661