What's the impact of Qwest's acquisition on employees, service, investors?

 

The Salt Lake Tribune

April 22, 2010

 

Here are some answers to questions about Qwest's acquisition by CenturyTel:

 

What will be the impact on Utah employees?

The deal probably will lead to job cuts at the companies, which are already shedding positions. The Communications Workers of America, the largest union in the telecommunications industry, said it "looks forward to serious discussions" with both companies.

 

Qwest employs 2,200 workers in Utah, said spokesman Mark Molzen, in management positions and in such jobs as engineers, technicians and call center workers. They are represented by the CWA. Molzen said it's too early to know whether positions in Utah will be cut.

 

How will Qwest phone service be affected?

It's not expected that Qwest customers will see any changes, Molzen said, but with the merger some services and product lines could be expanded.

 

The combined company would have 18 million phone lines serving customers in 37 states, though would still be dwarfed by AT&T Inc. and Verizon Communications Inc. as the No. 3 provider.

 

But it would still be in the grip of a dismal trend. The number of landlines in the U.S. shrinks by about 10 percent per year as consumers chose to rely on their wireless phones or service from cable companies. Comcast Inc. is the No. 4 local phone provider.

 

What will this mean to Qwest shareholders?

CenturyTel is offering stock worth $6.02 per share for each Qwest share, a premium of about 15 percent to Qwest's Wednesday closing price of $5.24. Qwest shareholders might benefit from CenturyTel's higher quarterly dividend if the deal goes through. Qwest's dividend is worth 32 cents per share. Under the terms of the acquisition, Qwest shareholders would be getting the equivalent of 48 cents per share in future dividends.