Qwest Looking To Sell Or Close Down Assets to Reduce Debt

Qwest Communications International

During an investor call, CEO Richard Notebaert said Qwest is looking at all business units and is considering selling off unprofitable and non-strategic assets.

Although Qwest's wireless business is "strategic" to Qwest's bundling strategy, the company is not ruling out selling that business, Notebaert said.

"At the right price, we would sell it, " Notebaert said. If the company opts to sell its wireless business, it would form a private-label partnership with another carrier, he said.

Notebaert said about 37 percent of Qwest's consumers buy packages including wireless, DSL, a baseline connection and other service combinations.

"Bundles are very important," he said. "I think we've been talking about packaging since '93, and I think it's very positive from a consumer point of view."

Notebaert also mentioned Qwest's CyberSolution centers as possible acquisition targets, as well as access lines.

"We have no plans to sell access lines," Notebaert said. "On the other hand, if a friend came up to me and offered $10,000 for an access line, we'd pay attention."

Qwest is in the process of selling its directory business, QwestDex, to The Carlyle Group and Welsh, Carson, Anderson and Stowe for $7.05 billion.

"We have a number of assets smaller than Dex that are not necessarily strategic or earning their way," said Oren Shaffer, vice chairman and CEO of Qwest. "These assets will be a focus of additional efforts to de-leverage through asset sales."

Notebaert said Qwest is putting every business unit and service offering under a microscope to look at the return on invested capital over time. "We're making adjustments to make [each profitable, and if we can't do that, we'll either sell it or close it down," he said.

Notebaert added that Qwest will be cash-flow positive this year and next year, and that the renegotiation of its credit also helped ease some of its financial burdens.

Earlier this month, Qwest amended its credit facility with lenders, which gave it an extension on covenants into 2005.

Shaffer also said Qwest is still investing in its network, but is keeping its capital spending low. The company's cash burn rate is about $1 billion, he said.