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Qwest Seeks To Sell Piece Of Its Nelwork
By amol Sharma and Dana Cimilluca
The Wall Street Journal
Tuesday, April 2, 2009

Qwest Communications International, Inc. struggling to pare a hefty debt load, is seeking a buyer for a key piece of its telecommunications network, according to people familiar with the matter.

A sale, which could raise between $2 billion to $3 billion, these people said, would largely leave Denver-based Qwest as a regional provider of telephone and Internet services to consumers.

Qwest is considering selling a long-distance network that carries calls and Internet traffic for other phone carriers.  The unit also provides advanced telecom services to businesses and government agencies.

Potential bidders include companies with similar networks, such as Qwest's larger rivals, AT&T Inc. and Verizon Communications Inc., and smaller players like Level 3 Communications Inc. and TW Telecom Inc., the people said.

A spokesman for Qwest, which has a market value of about $6.5 billion, declined to comment.

Investors and analysts have been concerned in recent months about Qwest's nearly $14 billion in debt.  The company, which has about $575 million in cash, says it is generating enough cash to pay down debt and says its debt situation is manageable.

While a sale of the business would help, finding a buyer could be difficult, with companies across the telecom sector in cash-preservation mode and credit difficult to come by.

Verizon or AT&T might be attracted by the savings they would get from moving Qwest's corporate and government clients onto their own networks and shutting down Qwest's network, the people said.

Verizon, AT&T and TW Telecom declined to comment.  A Level 3 spokesman declined to comment on Qwest's potential sale but said Level 3 "has always considered itself a natural consolidator in the telecom industry."

Qwest spent the last several years trying to rebound from accounting and insider-trading scandals stemming from early this decade, and missed out on the wave of consolidation that turned AT&T and Verizon into behemoths.

The company has 11.6 million traditional phone customers, making it the third-largest U.S. provider.  Without a wireless unit, Qwest lacks the growth engine that has powered its rivals.  Qwest doesn't break out the revenue from its long-distance network versus its local phone and Internet business, which operates in 14 states.

---Matthew Kamitschnig contributed to this article.

Write to Amol Sharma at amol.sharma@wsj.com and Dana Cimilluca at dana.cimilluca@wsj.com

http://online.wsj.com/article/SB123861451489479349.html