[1st-mile-nm] Qwest Corp. news

[Richard Lowenberg]

Qwest Wants To Sell Long-Haul Assets; But Buyers Scarce
Posted by Eric Savitz, April 2, 2009

http://blogs.barrons.com/techtraderdaily/2009/04/02/qwest-wants-to-sell-long-haul-assets-but-buyers-scarce/

Qwest is seeking to sell its long-haul network, which carriers voice and data
traffic for other telcos, according to the Wall Street Journal. The story said
a transaction could bring the company between $2 billion and $3 billion in
proceeds.

The story theorizes that the business could be sold to the titans of U.S.
telecommunications, Verizon (VZ) or AT&T (T), or perhaps a smaller player like
Level 3 (LVLT) or TW Telecom (TWTC).

But don?t count on such a deal happening any time soon. David Barden, telecom
analyst at Bank of America/Merrill Lynch asserts in a research note late
Wednesday that a sale of the type the WSJ describes is ?unlikely,? due to
regulatory hurdles, the strategic direction of some potential buyers, and a
lack of capital for others. He says Qwest might hold strategic value to a large
local phone company, but that ?timing with regard to current industry
consolidation precludes such a transaction at this time.? He theorizes that
?Qwest may simply be gauging interest prior to returning to the debt
market.?

In particular, he asserts that the regulatory environment appears unfavorable
for a potential combination of Qwest?s long haul business with Verizon or
AT&T. He notes that AT&T?s merger with Bell South got bogged down at the FCC
while the commission was still in Republican control. Winning FCC approval for
the sale of  Qwest?s long-haul assets to T or VZ with the Democrats in
control, he says ?is uncertain.?

As for Level 3 and TW Telecom, he notes that they ?lack the currency to
complete a transaction of this size.? Note that the current market cap for
LVLT is $1.5 billion; TWTC has a market cap of $1.3 billion. (And both
companies already shoulder substantial debt burdens.)

Meanwhile, Barden maintains his Buy rating and $4 price target on Qwest shares,
asserting that the company?s stock and debt are trading as if the company
faces deeply challenging debt refunding requirements - but he contends that is
not the case, and notes that investors are getting an 8.5% dividend yield as a
result.

--------

Qwest could become RLEC consolidator, analysts say
Ed Gubbins April 2nd, 2009

http://blog.telephonyonline.com/unfiltered/2009/04/

Qwest Communications could become a consolidator of rural telcos if and when it
divests its long-haul network (as the Wall Street Journal reports it is now
looking to do), according to analysts at Stifel Nicolaus, who issued a research
note this morning.

?A sale would certainly help alleviate near-term debt maturity concerns for
[Qwest] and, we believe, would position the remaining ILEC business to be a
player in the M&A game itself going forward,? the analysts wrote.

Qwest has long been imagined as a potential consolidator of rural telcos but has
thus far stayed on the sidelines as, for example, CenturyTel acuired Embarq last
year.

But the impending maturity of the company?s debt could motivate it to
liquidate its long-haul assets sooner rather than later. Qwest has $2.8 billion
in debt maturing between now and the end of next year and less than $600 million
in cash at the end of 2008. That could pressure the company to sell quickly,
Stifel Nicolaus said, and ? in today?s tight economy ? at a lower price
than the carrier might have gotten 6 or 12 months ago.

Splitting off the long-haul assets would essentially undo the merger of Qwest
and local incumbent US West enacted in 1999 by Joe Nacchio, who is currently
counting on the US Supreme Court to keep him from serving a 6-year prison
sentence for insider trading.

Industry prognosticators have cited Level 3, Time Warner Telecom, Global
Crossing, AT&T and Verizon as potential bidders for Qwest?s long-haul
network.



-- 
Richard Lowenberg
1st-Mile Institute
P.O. Box 8001, Santa Fe, NM 87504
505-989-9110;   505-603-5200 cell
rl at 1st-mile.com  www.1st-mile.com

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