Qwest DSL Count Up, Costs Down in 1Q

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Struggling Qwest Communications International Inc. shored up its bottom line during the first quarter, raising profits and broadband-subscriber numbers while cutting costs.

The Denver-based regional Bell operating company reported earnings of $88 million, or $0.05 per fully diluted share, a healthy increase compared with $57 million ($0.03) in the first quarter of 2005.

Revenue totaled of $3.5 billion, a modest 0.8% increase compared with the prior first quarter, while the telco cut operating expenses 4% to $3.1 billion.

Qwest also saw healthy increases in its digital-subscriber-line business, adding a record 198,000 new customers -- although that included 18,000 customers added in previous periods but not recognized.

Much of that growth came from dial-up customers moving to broadband and reduced churn. Qwest now claims 1.7 million DSL customers, a 50% increase versus the first quarter of 2005’s count.

Qwest’s total switched-line losses were less than its fellow Bell peers, dropping 4.8% in the first quarter compared with the same quarter last year.

Capital expenditures totaled $390 million during the quarter, an increase from $313 million in the first quarter of 2005. That rise reflected ramping upgrades to expand Qwest’s broadband-data footprint. For the rest of the year, capital expenditures are expected to be slightly ahead of 2005 levels.

Through network improvements, about 78% of Qwest’s households are eligible for DSL service, compared with 67% at the end of 2004. Within that footprint, about 98% of the homes can tap DSL at speeds of 1.5 megabits per second or greater, and more than 50% can buy service at 3 mbps or greater.

On the video side, Qwest’s ChoiceTV service -- which includes its own DSL-backed video offering fielded in Highlands Ranch, Colo., and Phoenix; a cable-TV system in Omaha; and DirecTV Inc.-based service offered throughout its Western-state territory -- added 228,000 customers. That’s a 128% jump from the 100,000 it had at the end of the first quarter of 2005.

Qwest also managed to shed $1.9 billion in debt in the past year, with an overall debt load now standing at $15.4 billion.

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