Takeover Talk Sends Qwest Shares to 52-Week High
By Dionne Searcey
The Wall Street Journal
Friday, March 17, 2006
Qwest Communications International Inc. closed at a
52-week high yesterday, as a possible acquisition elsewhere
in the telecommunications industry led investors to
speculate that Qwest could also be a candidate for a
The Denver-based company's stock spiked to a four-year high
of $7.48 by midday before pulling back. Shares closed at
$7.09, up 22 cents, or 3.2%, in 4 p.m. New York Stock
Exchange Composite trading.
The rally was driven by news that two investment firms are
Vodafone Group PLC's Japanese mobile subsidiary.
Investors are hoping that private-equity firms and other
cash-rich investors will also make a move on Qwest. A Qwest
spokesman said the company doesn't comment on the day-to-day
movement of its shares.
Cerberus Partners LP and Providence Equity Partners Inc. --
a hedge fund and private-equity firm, respectively -- are
preparing to make a multibillion dollar bid for the Japanese
Vodafone unit, according to people familiar with the
matter. The two firms see that business as a valuable entry
to the Japanese market. Vodafone, meanwhile, has been under
pressure from investors to shed its assets in Japan.
Qwest's future has been the subject of speculation since the
recent announcement that
AT&T Inc. had reached a $67 billion deal to takeover
BellSouth Corp. Wall Street is questioning how Qwest
fits into the new telecom landscape if regulators approve
the AT&T-BellSouth deal.
Verizon Communications Inc. has downplayed rumors that
it might be interested in buying Qwest, which has led some
investors to believe that private-equity firms or other
potential acquirers might be interested.
However, some analysts consider Qwest a mediocre asset:
While the company serves metropolitan markets including
Phoenix, Denver and Seattle, its phone lines also stretch
across a wide swath of rural territory, making them more
expensive to tend than those in urban centers.
Also, many consumers are continuing to disconnect their
landlines in favor of cellphones or Internet phone service.
Most major phone companies have been able to offset those
losses by owning wireless assets, a growth business. But
Qwest only resells wireless service from
Sprint Nextel Corp.
Like other phone companies, Qwest is facing a significant
threat from cable competition. Todd Rosenbluth, an analyst
with Standard and Poor's in New York, said any investment
firm looking to buy a telecom company might do better to
take over a smaller, rural operation that has insignificant
competition from cable and a stable customer base.
"There are better plays out there," he said.
Dionne Searcey at