Qwest Warns of Lower Revenue
By Jay Miller
The Wall Street Journal
Wednesday, April 8, 2009
Qwest Communications International
Inc. warned that
it expects first-quarter revenue to come in "modestly" below
Wall Street expectations, but did say it expects adjusted
earnings to come in above views.
Qwest provided the financial update as it looks to offer debt.
Originally, the company planned a $300 million offering, but
late Tuesday the company increased that offering to $810.5
million. The seven-year notes priced at just under 92.5%
"We're pleased with the strong demand and success of this
offer," said Joseph J. Euteneuer, Qwest executive vice president
and chief financial officer.
Standard & Poor's Ratings Service assigned the notes a BBB-
rating, one notch above junk. However, the ratings agency
also dropped the rating on the company's $850 million revolving
credit to BB, two notches below investment grade, after catching
wind of the bigger offering.
"We lowered the rating on the revolving credit due to heightened
concentration of priority claims at time of default under our
recovery methodology, notably additional debt at Qwest Corp.,
given the upsizing in the new debt issue," said Standard &
Poor's credit analyst Richard Siderman.
The phone carrier, one of three remaining Baby Bells, has been
hurting from a slowing economy and stiff competition from cable
and wireless alternatives. The company is hoping to offset
its access-line loss and weakness in its wholesale business
through growth in data and Internet services. The weak
housing market is also contributing, as it means less demand for
The telecommunications company also said it expects its free
cash flow figures to be in line with its February guidance.
Earlier Tuesday, the company said it would offer $300 million of
debt securities in a private placement. Qwest planned to
use proceeds for general corporate purposes, including repayment
of debt and funding investments in its telecommunications
The company will report quarterly results April 29.
Write to Jay Miller at