for Qwest unclear
Some think Verizon might try to buy to gain size
By Tom McGhee, Staff Writer
Monday, March 6, 2006
AT&T's offer Sunday for BellSouth raised speculation in some
quarters that the move might prompt Verizon to make a bid
for Qwest at some point in an effort to counter AT&T's
But few experts saw merit in such a union.
Qwest spokesman Robert W. Charlton said Sunday he wouldn't
speculate on any merger activity involving the Denver-based
"We continue to watch industry consolidation with interest
as we remain focused on customer service and operational
excellence to enhance Qwest shareholder value," he said.
Qwest chief executive Richard Notebaert was in New York last
week and spoke at the Reuters Global Technology, Media and
Telecoms Summit. Charlton said the visit had nothing to do
with New York-based Verizon.
Verizon spokesman Eric Rabe wouldn't comment on any possible
Verizon interest in Qwest.
A beefed-up AT&T, which would have a combined market
capitalization of more than $150 billion if its bid for
BellSouth is approved, isn't likely to cause Verizon to bid
for Qwest, said Scott Cleland, chief executive of the
Precursor research firm.
He said local phone service isn't that attractive to
Verizon, which has a market cap of $93 billion. AT&T is
interested in BellSouth both for its wired-line customer
base and because an acquisition would allow it to gain
control of Cingular Wireless, the nation's largest cellphone
provider, he said.
Last year, Verizon outbid Qwest for long-distance carrier
MCI. The deal would have made Qwest better able to compete
for business customers.
While Qwest has an Internet backbone, the company is
predominantly a local phone company serving 14 Western
states. Like other traditional phone companies, Qwest has
been losing customers as many replace their land lines with
wireless and other telephone alternatives. Qwest doesn't
own a wireless network but instead resells Sprint wireless
Janco Partners analyst Donna Jaegers said a merger between
AT&T and BellSouth would leave Qwest, the runt of the Baby
Bell litter, with less opportunity to match the size of its
massive rivals. Qwest has a market cap of $12.3 billion.
BellSouth could have been a possible merger partner for
Qwest, Jaegers said.
Qwest's best chance for large-scale growth could rest with
two local phone companies that don't currently exist.
Sprint Nextel Corp. and Alltel Corp. plan to spin off their
local-phone units to investors, allowing the carriers to
focus on their wireless operations.
"The next big round of consolidation after this is going to
occur because of the Sprint and All tel spinoffs. I
wouldn't be surprised to see those properties do something
with Qwest," Cleland said.
The merger would be the latest in a string of deals that
have paired up telephone companies created when the
government broke up the Bell monopoly in 1984. If the
acquisition of BellSouth by AT&T goes through, it would
leave Qwest as the only Ma Bell spinoff unattached to other
Staff writer Tom McGhee
can be reached at 303-820-1671 or