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Qwest leaders seeking respect
CEO Richard Notebaert cites stable revenues, a lawsuit settlement and improved cash flow.
By Beth Potter, Staff Writer
Denver Post
Wednesday, November 9, 2005


Qwest executives want a little more respect - and they believe they've earned it.

"We're at the corner, and we don't have to bend to look around it," Qwest chief executive Richard Notebaert said Tuesday in an interview at The Denver Post.

Notebaert highlighted measurable improvements at the Denver-based phone company that he took over three years ago when it was on the brink of bankruptcy.

Qwest on Nov. 1 announced stable third-quarter revenues and improved net income.

It also announced a $400 million settlement in a shareholder lawsuit related to accounting irregularities under former Qwest CEO Joe Nacchio.

Recent debt refinancing will generate an additional $300 million in free cash flow, and Qwest's stock price closed at $4.66 on Tuesday, showing a steady climb over the past six months.

Qwest chief financial officer Oren Shaffer said analysts are just starting to understand the transformation underway at Qwest. He said four analysts have upgraded their recommendations in the last week.

Even though Qwest expects to see improved cash flow because of its refinancing, its debt will still be rated below investment grade.

"Our objective is to get back to investment-grade credit ratings," Shaffer said.

To do that, the company will need to get its debt closer to $12 billion. Its debt has hovered around $17 billion for the past year.

Local analysts say the company has done a great job of putting itself on stronger financial footing but still has to stay on its toes to meet the challenges of the rapidly changing telecommunications industry.

One of the biggest threats to Qwest's bread-and-butter telephone lines is Philadelphia-based Comcast Corp.'s. plan to roll out Internet phone service in Colorado next week, said analyst Donna Jaegers.

"Comcast is starting to more aggressively roll out the voice over IP (Internet protocol). That's the risk:  The Comcast footprint overlaps 40 percent of (Qwest's) residential lines," Jaegers said.

Bring on the competition, Notebaert said.

"We have to think like Target, with changing prices and changing bundles," he said.  "I think it's a very difficult and challenging industry with the technology changes, but it's also a great challenge."

Staff writer Beth Potter can be reached at 303-820-1503 or bpotter@denverpost.com.


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