CenturyLink And Qwest
Probably Won't Pursue Wireless
'We are not going to go out and buy shirt factories,' says CEO
April 23, 2010
As we mentioned yesterday, Qwest
and CenturyLink have announced a merger valued at around $23.4
billion dollars (half of that being Qwest debt). As we also
mentioned, neither company has a wireless division that will
help them mitigate landline defections or help pay for necessary
upgrades for the outdated last-mile copper infrastructure
serving most of their residential customers. So will the new
company try to get into wireless to help fund upgrades? All
signs point to no, according to
executive comments and analyst opinion.
"We are not going to go out and buy shirt factories,"
CenturyLink President and CEO Glen Post told analysts on
Thursday’s conference call, hinting at any big play into
businesses seen as veering too far from core terrestrial data.
"We are going to be in the communications business, said Post --
reiterating that "the future of our company is really in data"
when speaking to the Financial
So the company's "future is in data," yet they'll probably be
nursing last-mile copper for the next decade if not more in most
markets. Bonded 25/2 ADSL2+ may be as good as it gets (assuming
a market sees competition) -- with no wireless play. Of course
while the company will have Qwest's long haul network, a good
fiber core, and a business providing backhaul bandwidth --
they're going to need lots of cash to be competitive
While CenturyLink does offer limited TV services, Qwest
repeatedly insisted an "over the top" solution (IP Internet video
of the consumer's choice) was best -- so that is a debate that
will need to shake out as well. Qwest's opinion on that front
was partially due to their interest in eliminating debt so they
could make this very deal happen. Things could change on the
IPTV front but again -- that's going to require a significant
amount of money.
So where is the money for expansion going to come from? You,
probably. A primary motivation for the merger was to create a
new telco big enough to get a lion's share of broadband stimulus
subsidies. The new, bigger company also has its eyes on the USF
program -- which is being revamped with a focus on broadband --
but also on giving more of these USF funds to bigger carriers
(something AT&T and Verizon have spent several years lobbying
very hard for).
Meanwhile, from talking with people within the two companies,
we're pretty sure that the new company will take on the newer
CenturyLink brand. It's a blank
slate for most people (we saw more than a few reporters
yesterday call the company "CenturyTel," the name they had
before merging with Embarq) and a lot of effort has been put
into the new brand. A newer name can also help the company
distance itself from the Qwest financial accounting scandal
associations of a few years ago (or, possibly,
even more recently).