No public offers yet for Qwest network
But the telecom hasn't confirmed the fiber-optic system is up
By Steve Raabe
Tuesday, May 12, 2009
No buyers have publicly surfaced for Qwest's fiber-optic
communications network following news reports that it was put up
for sale nearly six weeks ago, leaving analysts wondering
whether anyone will step up.
Qwest has not confirmed published reports that the nationwide
voice and data network is for sale to reduce operating costs and
pay down corporate debt.
However, that hasn't stopped analysts from speculating about the
identity of prospective purchasers.
Verizon Communications is widely viewed as a possible buyer in
order to increase the capacity of its fast-growing fiber-optic
network. Other companies mentioned as prospective
purchasers include AT&T, Broomfield-based Level 3
Communications, Sprint and TW Telecom.
"We believe Verizon is the most likely buyer," telecom analyst
John Hodulik of UBS said in a research report.
Hodulik said Verizon potentially could realize at least $1
billion in synergies from acquiring the Qwest network, which is
being priced at an estimated $2 billion to $3 billion.
Verizon took a look at the deal but balked at that price, said
analyst Chris King of Stifel, Nicolaus & Co.
"Verizon had interest, but at a substantially lower price than
Qwest would like to accept," King said. "And I would argue
that they don't need the asset. They have no huge capacity
constraints. They may have some (capacity) issues, but
there are ways around that short of buying Qwest's whole global
Verizon will not comment on the Qwest speculation, but
spokeswoman Linda Laughlin said Verizon over the past five years
has used technology upgrades that allowed it to quadruple the
capacity of its existing fiber network, thus limiting the need
to purchase or build additional capacity.
Telecom analyst Lisa Pierce of Strategic Networks Group said she
is not convinced Qwest is offering its network for sale, despite
published reports that Qwest has hired Goldman Sachs and
Deutsche Bank to broker a deal.
"Qwest is very pleased with the progress of its business
services group, and it needs the nationwide network to serve
that group," Pierce said. "I'd be very surprised if they
sold the network."
Steve Raabe: 303-954-1948 or