AUSWR
The Association of U S West Retirees
 

 

 

Qwest poised for total sale?
Analysts see that as a possibility if it sells off its fiber-optic network. 
By Steve Raabe
Denver Post
Friday, April 3, 2009

Qwest's possible sale of its nationwide fiber-optic network could be a prelude to selling the rest of the company, analysts said Thursday.

Qwest's reported desire to sell the long-haul network would leave a local-phone-service carrier that "would likely get caught up in the ongoing consolidation of the local-exchange market, potentially through the sale of the company to a smaller player," said UBS telecommunications analyst John Hodulik.

Possible buyers, he said, could include Monroe, La.-based CenturyTel, Frontier Communications of Stamford, Conn., and Little Rock, Ark.-based Windstream Communications.  None of the companies commented Thursday.

Hodulik said it is also possible that Qwest could be the acquirer in a merger between local-phone companies.

Qwest said Thursday it is laying off an unspecified number of workers in its business-markets group, which relies heavily on the company's fiber-optic network.

"The reductions were focused on areas where we determined we could become more efficient, but we are not disclosing specifics," said Qwest spokeswoman Johnna Hoff.

At the end of 2008, Qwest had 33,000 employees, including 8,000 in Colorado.

If Qwest sells the long-haul fiber network for an estimated $2 billion to $3 billion, Hodulik said, the remaining local-phone operation would represent "the rebirth of U S West" the former 14-state Baby Bell that merged with Qwest in 2000.

Qwest officials have declined to comment on a report this week in The Wall Street Journal quoting unnamed sources as saying the fiber network is up for sale.  The network carries phone and Internet service for other phone carriers and provides data delivery for businesses and government agencies.

"Qwest going forward continues to look like a small company, and it is getting smaller," said telecom analyst Jeff Kagan.

"The company won't go out of business," he said.  "However, over the next several years customers will have more choices and Qwest will lose more business to (long-haul fiber) competitors."

Steve Raabe: 303-954-1948 or sraabe@denverpost.com

http://www.denverpost.com/business/ci_12059813