Denver-based Qwest Communications International Inc. said today it narrowed its fourth-quarter loss to $139 million and its chief executive promised to look for other opportunities after losing a bid to acquire MCI.
Chairman and CEO Dick Notebaert said the Denver-based telecommunications company may benefit if competitors involved in pending mergers are required by federal regulators to divest certain assets.
“There will be some real antitrust questions as well as regulatory,” Notebaert told analysts during a conference call.
“From where we sit, there’s lots of opportunity and there’s lot of things that could unfold in the months to come.”
Earlier this week, Qwest learned its bid for Ashburn, Va.-based long-distance company MCI had been rejected in favor of a lower offer from Verizon Communications Inc. Analysts said the better financial condition of New York-based Verizon likely contributed to MCI’s spurning of Qwest.
Notebaert declined comment on whether Qwest is looking at other assets or companies, though he conceded he was disappointed by MCI’s $6.7 billion cash-and-stock deal with Verizon.
“(It was) just a couple of years ago that we were written off as dead or going bankrupt. If you’ve noticed anything in the past couple of weeks, it’s probably that Qwest is a little bit on the feisty side,” he told The Associated Press in an interview.
“No one expected us to do what we did so I’m sure that we’ll continue down the path of looking at every opportunity and maybe we’ll surprise some people again.”
For the September-December quarter, Qwest’s loss amounted to 8 cents per share, compared with a net loss of $407 million, or 23 cents per share, in the fourth quarter of 2003. The results beat the expectations of analysts surveyed by Thomson First Call, who projected a loss of 13 cents per share.
Revenue was $3.43 billion during the quarter, down 1.7 percent from $3.49 billion in the same quarter the year before. The company said that was the smallest year-to-year decline in the past eight quarters.
Notebaert attributed the improved results to an increase in DSL Internet service subscribers and increased sales of packaged services, such as landline and long-distance services. Although access line losses continued, the rate of loss was lower than in the previous quarter, the company said.
For all of 2004, the company lost $1.79 billion, or $1 per share, compared with a 2003 profit of $1.51 billion, or 87 cents per share. Annual revenues shrank 3.4 percent, to $13.81 billion from $14.29 billion. Qwest blamed the decline in revenues on local losses and “competitive pressures in the enterprise market.”
The quarterly results were better than expected but not enough to solve long-term problems, independent telecommunications consultant Tom Friedberg said. Qwest has more than $17 billion in debt, no wireless division and faces competition from both cable and high-speed data companies.
Janco Partners research analyst Donna Jaegers predicted Qwest will perform better than expected in the next few quarters, noting the effects of a limited price increase and cost-cutting measures.
But, she said, they will need to continue investing in systems if growth in the marketplace continues.
She also said MCI stockholders may balk at the Verizon deal, opening the door for Qwest to submit another bid.
“We may not have not heard the last of this romance between Qwest and MCI,” she said.
Qwest shares closed up 5 cents, or 1.3 percent, at $4.03 on the New York Stock Exchange. The stock has traded in a 52-week range of $2.56 to $5.
