Qwest Open to Buyout, But Hasn't Talked to BellSouth,
CEO Says
Qwest Open to Buyout, But Hasn't Talked to BellSouth, CEO Says
New York, Oct. 8 (Bloomberg) -- Qwest Communications International Inc., the No.
4 U.S. long-distance company, is open to being bought but hasn't heard whether
BellSouth Corp. is preparing a bid, Qwest Chairman Joseph Nacchio said.
Nacchio said he would support a sale of Denver-based Qwest if he gets an offer
that benefits shareholders. BellSouth and Qwest haven't discussed a combination,
he said, because Nacchio isn't permitted to talk to other companies until Qwest
and U S West Inc. shareowners vote Nov. 2 on their $45.2 billion merger.
BellSouth, which owns 10 percent of Qwest, is expected to make an acquisition or
become a takeover target itself, investors said. In June, it said it's considering
buying Qwest or boosting its stake to offer nationwide long-distance service,
including in the nine southeastern states where it's the local phone company.
BellSouth failed in its bid to buy Sprint Corp. by losing out to MCI WorldCom Inc.,
leading to speculation it would pursue Qwest. ''I cannot participate even in those
(buyout) discussions with someone unless they were to give me a firm offer, so I
have no idea what (BellSouth's) intentions are,'' Nacchio said.
BellSouth didn't tell Qwest it was going to bid for No. 3 U.S. long-distance carrier
Sprint, Nacchio said in an interview at Fall Internet World '99. BellSouth wasn't
obligated to tell Qwest of its plans, he said. ''We have a great relationship with
BellSouth,'' said Nacchio, who is also Qwest's chief executive. ''I've talked to
them, I've talked to (BellSouth Chief Executive) Duane Ackerman since then. ''I
understood why they did it, and I understood the role we would've played, and
we're fine,'' Nacchio said.
Qwest has built an 18,500-mile national fiber-optic network to capitalize on soaring
demand for Internet services. It's building local networks in 25 cities to sell voice,
video and data transmission to businesses, in a bid to displace local phone
companies like BellSouth.
Wireless
Qwest doesn't need a wireless network to become a super carrier, he said. MCI
WorldCom's $129 billion bid for Sprint this week, which would be the biggest
corporate takeover in history, was prompted primarily by MCI WorldCom's need to
sell wireless services to its customers. ''I think the bundled thing is a little bit
overdone,'' Nacchio said. ''Wireless is something which over time we'll decide
on.'' U S West, which provides local phone service in 14 western states, also has
a regional wireless-phone network with about 290,000 subscribers.
The upcoming initial public offering of shares in KPNQwest, Qwest's joint venture
with the Dutch telecommunications company Royal KPN NV, could allow Qwest to
make additional acquisitions in Europe, Nacchio said. ''What we want to do is
have a company where we have a major ownership and a separate currency, so
that it can move somewhat independent'' of Qwest's assets, he said. The IPO
gives the companies ''a lot more flexibility.''
Merger Status
The Qwest-U S West merger is expected to close by July 2000, Nacchio said.
Qwest is meeting with U.S. Federal Communications Commission officials next
week to discuss how to divest itself of long-distance customers in the U S West
region. As a local phone company, U S West is barred from selling long-distance
service until it's proved to regulators that it's opened its local network to
competition.
There are no plans to buy back Qwest's stock to boost the flagging share price,
Nacchio said. Qwest's shares have fallen 30 percent from their 52-week high of 52
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