Qwest Adds Customers, Profits In First Quarter

The company has been struggling under the shadow of AT&T and Verizon.
In spite of a heavy debt load and the lack of its own mobile phone offering, Qwest Communications International reported Wednesday that its first-quarter earnings rose to $206 million from $150 million in the prior year's first quarter.

The good earnings news was particularly welcome as the company has been struggling under the shadow of its two larger former regional Bell operating companies, AT&T and Verizon, which, unlike Qwest, own robust mobile phone offerings that are pacing their growth.

In its report, Qwest said revenue fell 7% to $3.2 billion as consumers continue to drop their landline services in favor of wireless. Since selling its own wireless service a few years ago, Qwest has been reselling Verizon Wireless service.

Qwest has trimmed costs largely by reducing its workforce by about 10% in recent months, as well as by tightening spending.

"Disciplined execution and focus on cost controls have produced a strong start to the year given the current economic climate," chairman and CEO Edward Mueller said in a statement. "We are seeing tangible results from our focus on our key strategies to perfect the customer experience, including demand for our leading data services and strong results from our partnerships."

The company added 30,000 new wireless customers, and many of them signed up for bundled Qwest services that include landline calling and broadband Internet service that add to the company's overall customer base. Revenue in its business services unit rose to $1 billion, a 3% gain. Another operation adding to the company's ongoing business is its participation in the massive Networx Universal contract, the federal government's project to upgrade wireless and landline infrastructures.

With some $14 billion in debt, the company has been urged by investment banking analysts to sell off some assets, possibly its fiber-optic network or even the business services unit. The company has clawed its way back to profitability after a series of accounting and insider trading scandals that have sent its former CEO, Joe Nacchio, to prison. Nacchio has denied all the charges leveled against him and continued to fight the charges from prison in Pennsylvania.

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