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No public offers yet for Qwest network
But the telecom hasn't confirmed the fiber-optic system is up for sale. 
By Steve Raabe
Denver Post
Tuesday, May 12, 2009

No buyers have publicly surfaced for Qwest's fiber-optic communications network following news reports that it was put up for sale nearly six weeks ago, leaving analysts wondering whether anyone will step up.

Qwest has not confirmed published reports that the nationwide voice and data network is for sale to reduce operating costs and pay down corporate debt.

However, that hasn't stopped analysts from speculating about the identity of prospective purchasers.

Verizon Communications is widely viewed as a possible buyer in order to increase the capacity of its fast-growing fiber-optic network.  Other companies mentioned as prospective purchasers include AT&T, Broomfield-based Level 3 Communications, Sprint and TW Telecom.

"We believe Verizon is the most likely buyer," telecom analyst John Hodulik of UBS said in a research report.

Hodulik said Verizon potentially could realize at least $1 billion in synergies from acquiring the Qwest network, which is being priced at an estimated $2 billion to $3 billion.

Verizon took a look at the deal but balked at that price, said analyst Chris King of Stifel, Nicolaus & Co.

"Verizon had interest, but at a substantially lower price than Qwest would like to accept," King said.  "And I would argue that they don't need the asset.  They have no huge capacity constraints.  They may have some (capacity) issues, but there are ways around that short of buying Qwest's whole global network."

Verizon will not comment on the Qwest speculation, but spokeswoman Linda Laughlin said Verizon over the past five years has used technology upgrades that allowed it to quadruple the capacity of its existing fiber network, thus limiting the need to purchase or build additional capacity.

Telecom analyst Lisa Pierce of Strategic Networks Group said she is not convinced Qwest is offering its network for sale, despite published reports that Qwest has hired Goldman Sachs and Deutsche Bank to broker a deal.

"Qwest is very pleased with the progress of its business services group, and it needs the nationwide network to serve that group," Pierce said.  "I'd be very surprised if they sold the network."

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

http://www.denverpost.com/business/ci_12347105