Qwest Does Better Than Expected

    February 14, 2005

Qwest Communications International was outbid by Verizon to purchase MCI, but at least narrowed its losses in the fourth quarter.

Qwest Communications International reported fourth quarter and full year 2004 results that benefited from improved year-over-year revenue and expense trends and solid growth in free cash flow. For the quarter, the fully diluted loss per share was $0.08 compared with a loss of $0.23 a year ago, which includes special items of $(0.02) and $0.06, respectively. For the full year, the fully diluted loss per share from continuing operations was $1.00 compared with a loss of $0.76 in 2003.

“We are pleased with the progress we have made in 2004 and we like the momentum we have entering 2005 to drive additional growth in our key lines of business,” said Richard C. Notebaert, Qwest chairman and CEO. “Over the past year, we have focused on improving productivity, extending our financial flexibility and strengthening our competitive position. For the year, we surpassed our growth targets for both DSL and in-region long-distance, deepened our bundle penetration, improved our access line trends, significantly reduced our costs and improved our key customer service metrics.”

Sales went down 1.7% to $3.44 billion.

A Bloomberg article says,”The sales decline, driven by the loss of customers to cell phones and new technologies, underscores pressure on Qwest Chief Executive Richard Notebaert to find a merger partner to manage $17.3 billion in debt. After losing MCI to Verizon Communications Inc., Denver-based Qwest may need another purchase or to sell its long-distance network, said UBS AG analyst John Hodulik.”

“Qwest is a company with no real growth prospects, its local business is going to continue” declining, said independent telecommunications analyst Thomas Friedberg. “It has no wireless, so consequently Qwest is isolated and it’s likely to remain so.”

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