FierceTelecom 2010 Prediction: Qwest goes to the auction block?
January 3, 2010
With many of the tier 2 telcos buying one
another, it's probably only a matter of time before one of them
gets ambitious and makes a possible move for Qwest, the smallest
of the remaining three RBOCs. The idea that Qwest, the third and
last standing RBOC, could be a target for acquisition by a tier
2 ILEC such as Windstream or CenturyLink was first posed in a
late-2009 in a Reuters article.
While an AT&T or Verizon bid for Qwest is not entirely out of
the question, the acquisition of Qwest's 14-state local line
operations and possibly its nationwide long-haul network could
be attractive to these tier 2s as a means to scale their
respective footprints. Tier two service providers have been on
the acquisition hunt as they continue to see their respective
wireline businesses (all of which lack a wireless component) go
to cable and wireline substitution.
Qwest does bring some attractive assets to the table: steady
cash flow as well as growing business and wholesale revenues in
2010. And even though Qwest lacks a wireless business, one
potential growth opportunity it has set its sights on is
wireless wholesale backhaul. This is not the first time that
rumors emerged about Qwest being in the M&A cycle. Last June,
there was rampant speculation that the ILEC was going to sell
its long haul business and assets only to take them off the
block when it felt as though it was getting apparently lowball
offers. Speculation aside, any tier 2 that could make a bid for
Qwest should be prepared to face the reality of not only
integrating a bigger network than their own, but a century-long
mentality that's likely counter to their business style. That
itself would be the biggest challenge and opportunity.