Qwest, CenturyLink See Continued Line Loss; Upbeat on Merger Approval
CenturyLink and Qwest continued to see access line loss and a slowdown in Internet subscribers in Q3. The companies are waiting for approvals from 10 states and federal regulators of their plans to merge.
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
The senior management team for the combined company has been named, said Qwest CEO Edward Mueller in a conference call Wednesday. The second tier team was also recently named, he said, and integration planning is under way. The companies continue to make progress with various agencies and commissions required to review the transaction, he said. “We continue to expect our merger with CenturyLink to close in the first half of 2011."
Qwest reported a net loss of $90 million vs. net income of $136 million in the same quarter of 2009. But the Q3 results were affected by a $229 million charge related to the conversion option on convertible notes, plus merger-related costs. Qwest expects a low-single digit annual rate of revenue decline in Q4 and full year 2010 adjusted earnings of about $4.4 billion. CenturyLink reported a quarterly profit of $231.2 million, down from $280.8 million a year earlier.
Qwest continued to lose land-line customers while adding broadband subscribers. Total access lines fell 10 percent from a year earlier, to 9.1 million, while broadband subscriptions rose 4.7 percent year-over-year. CenturyLink’s total access lines fell 7.8 percent from a year earlier, to 6.6 million, partially offset by growth in the broadband business. CenturyLink completed the third of five planned Embarq customer care system conversions and the two remaining conversions are on track to be completed by the end of Q3, 2011, said CEO Glen Post, former CenturyTel chief. Embarq acquired CenturyTel in 2009 in an all-stock transaction valued at $11.6 billion, including the assumption of $5.8 billion in Embarq’s debt.
There were a lot of activities in the small business market in the quarter, said Teresa Taylor, Qwest’s chief operating officer. But that doesn’t mean the small business space is turning around, she said. The economy’s still weak and the market is rough and highly competitive, she said. The company’s total expenses declined 9 percent year-over-year due to headcount reductions, less wireless cost and lower sales and marketing expenses, she said.