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Qwest 4Q Profits Sink; FTTN A Bright Spot

Although it reported a fourth-quarter earnings drop of 39%, Qwest Communications International signaled that the months ahead will bring an improvement.

The Denver-based telecom company said net income for the quarter was $108 million, a drop from the $177 million it reported in the previous year's fourth quarter.

The company said it has successfully completed the migration of its wireless services from Sprint Nextel to Verizon Wireless, ending the quarter with 850,000 wireless subscribers. It added 64,000 new wireless customers in the quarter.

After selling its Qwest mobile phone operation earlier in the decade, Qwest turned to Sprint, then to Verizon Wireless to offer wireless services to its customers.

Qwest also pointed to its aggressive deployment of fiber to the node (FTTN) in the quarter in which it added 80,000 new fiber customers.

While Qwest continued to lose landline customers, the company reported that the absolute number of landline losses was at its lowest point in two years. Qwest is the smallest of the remaining three former Regional Bell Operating Companies -- AT&T and Verizon are the other two -- and serves a largely rural landline customer base.

Another high note of the quarter was Qwest's success in reaching a goal of providing 2,000 cell sites. The firm supplies fiber-based backhaul services for different wireless carriers.

"In the quarter, we continued to create innovative approaches to drive efficiency and perfect the customer experience," said Edward Mueller, Qwest chairman and CEO, in a statement. "In particular, we did an excellent job of generating cash flows and strengthening the balance sheet."

Operating revenue in the quarter declined 9.7% to $2.994 billion. Much of the decline was attributed to a 13% drop in its consumer landline business. The cost of the wireless switch to Verizon Wireless accounted for much of Qwest's revenue and profit drop. The company also cut 4% of its workforce in the quarter.