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Qwest's Long Distance Network Draws No Serious Bids

Qwest Communications International has broken its silence on its long-distance network, stating "unsolicited" interest from potential purchasers of the unit weren't high enough. The company indicated it will retain the unit, at least for now.

Wall Street investment banking sources had touted the fiber-optic network as being worth between $2 billion and $3 billion, but offers were being proposed at less than $1 billion. Qwest never recovered completely from the fallout of the nationwide telecommunications meltdown of the late 1990s and is struggling from a $13 billion-plus debt load.

In an announcement late Monday, Qwest said it undertook a review of the long-distance network after receiving unsolicited "indications of interest from potential purchasers." The company then began a competitive bidding process, although Qwest didn't identify the bidders.

Qwest said there was significant interest in the auction, but its board of directors believed the long-distance unit has more value to the company as is, as part of Qwest, rather than as an asset to be sold.

"The review we conducted confirmed that our nationwide network is a tremendous asset and delivers best-in-class telecommunications services to businesses and government agencies throughout the country," Edward A. Mueller, Qwest's chairman and CEO, said in a statement. "We have always taken a disciplined, prudent approach to assessing our business in this ever-changing industry."

At the same time, Qwest reaffirmed its guidance for 2009, during which it expects adjusted free cash flow to be between $1.4 billion to $1.5 billion.

In addition to its nationwide long-distance network, Qwest has a valuable asset through its participation in the massive federal government Networx contract. In addition to its heavy debt load, the company hasn't received full benefit from its own wireless operation, because it offers Verizon Wireless to its customers.


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