cut 1,300 jobs during '06
Filings show Colorado lost 600 slots. Analysts question
whether the firm can afford to keep it up.
By Andy Vuong, Staff Writer
Tuesday, February 13, 2007
Amid its return to profitability in 2006, Qwest shrunk its
workforce by nearly 1,300 jobs, including 600 in Colorado.
Over the past two years, the Denver-based phone company shed
3,000 positions, including about 1,300 in the state,
according to regulatory filings. Some of the reduction has
come from natural attrition, and the vast majority has come
from union workers.
More cuts could be on the way as Qwest works to improve
operating margins while revenue remains relatively flat, but
analysts wonder how much leaner the company can get without
affecting service quality.
At the end of 2006, Qwest employed 38,383 people, including
about 9,400 in Colorado. About 22,000 Qwest employees were
represented by the Communications Workers of America, down
from roughly 25,000 at the end of 2004.
"How do they continue to provide good service if they cut
too much?" said Donna Jaegers, an analyst with Janco
Partners. "I don't imagine big numbers of people being cut.
There's going to be pressure on them if they continue to
lose market share."
Qwest's total access lines dropped by 6.4 percent in 2006
amid growing competition from cable and Internet-based phone
Still, the company reported last week its fourth straight
quarterly profit. Cost cuts and growth in high-speed
Internet subscribers helped offset access-line losses.
Qwest said in a filing with regulators that it continues to
cut its workforce "in response to changes in the
telecommunications industry and productivity improvements."
Rumors are circulating that the company may outsource some
of its information-technology and call-center work this
year. The company closed two call centers in 2006. Qwest
spokesman Bob Toevs said the company doesn't comment about
rumors or speculation.
Upgraded by analyst
Timothy Horan, an analyst with CIBC World Markets, upgraded
Qwest on Monday from "sector underperformer" to "sector
performer," citing management's ability to cut costs by $600
million over the past two years.
He wrote in a research note that "further reduction in
operating expenses could prove challenging."
"We remain concerned about (Qwest's long-term) video
strategy, ability to further lower expenses and increasing
cable competition," Horan wrote.
Qwest expects to save about $150 million in expenses this
year, partly from caps implemented at the beginning of the
year on life-insurance and health-care benefits for
retirees, according to last week's filing.
The life-insurance cap may be challenged in court by the
Association of US West Retirees. Qwest acquired US West in
In his research note, Horan suggested that Qwest could
create shareholder value by dividing the company into three
separate entities -- rural, urban/suburban and long-haul/out
of region (classic Qwest).
Staff writer Andy Vuong
can be reached at 303-954-1209 or