Qwest Posts Flat 2Q Numbers


Embattled regional Bell operating company Qwest Communications International
Inc. finally released its second-quarter earnings, posting a net loss and a
slight drop in operating revenue.

The Denver-based RBOC, struggling under a heavy debt load and investigations
into its accounting practices, saw income drop in the second quarter, posting a
$91 million loss compared with a $128 million profit in the first quarter. Net
income dropped back slightly from $3.63 billion in the first quarter to $3.6
billion for the second.

Qwest blamed the drop on increasing competitive pressure in its local voice
business, but the loss was stemmed in part by growth in long-distance and data

Qwest’s digital-subscriber-line business also flat-lined, adding just 9,000
new subscribers for the quarter. The company now claims 536,000 in-region
subscribers and 24,000 out-of-region subscribers. Qualified households remained
unchanged from the previous quarter, at 4.3 million, while DSL-equipped offices
rose slightly from 458,000 in the first quarter to 481,000 in the second.

Qwest also announced that its restatement of 2000 and 2001 financial results
is largely complete, and it expects to have discussions with the Securities and
Exchange Commission regarding the new numbers. The RBOC has been under
investigation by the SEC regarding its accounting of revenue from capacity swaps
with other carriers.

One bright spot in the earnings was indications that customer satisfaction
was improving. A recent J.D. Power and Associates survey turned up good marks
for Qwest among enterprise customers, and DSL customers rated the Bell highest
for pricing satisfaction.