[Qwest, LCI still need local strategy - analysts]
NEW YORK, March 9 (Reuters) - Qwest Communications International Inc's $4.4 billion acquisition of LCI International Inc gives it a national sales force and a long-distance presence, but the combined company still needs a local telephone strategy to be a full-service company, analysts said.
"They still need a local piece. To compete against the big three, they need to address that component," said Jeff Phillips, a consultant with Telechoice, a telecommunications management consulting firm.
Qwest and LCI together will create the fourth-largest U.S. long distance company behind AT&T Corp (NYSE:T), MCI-WorldCom and Sprint Corp (NYSE:FON).
The proposed merger of MCI Communications Corp (NASDAQ:MCIC) and WorldCom Inc (NASDAQ:WCOM), which remains subject to shareholder and regulatory approval, has raised the bar for telecommunications companies, analysts said.
The future market leaders must be able to provide local and long distance telephone service as well as data and wireless, analysts said.
LCI has made some moves into local telephone service by reselling service from other companies, but does not have aggressive plans to crack that market.
"The local business is one (about which) we know the foibles. I believe it is still critical that regulators and legislators get together on ensuring that we have a competitive market before anyone is going to be able to get in there...and have a real impact," LIC's chairman, H. Brian Thompson, said in a conference call.
Some analysts said the combined Qwest-LCI may become an attractive candidate for takeover by a Baby Bell as the telecommunications industry continues to consolidate.
"There there's nothing wrong with being the best-looking girl or guy at the dance, but that doesn't mean you have to go home with someone," Thompson said in a conference call when asked about the combined company being an attractive takeover candidate.
While Qwest and LCI will move cautiously in the local telephone market, the combined company expects to make strong moves in the international arena by building on their existing operation and through alliances.
In addition to Qwest's planned fiber-optic network, which will reach into Mexico and Britain, "also we're in a position to be not alienating the people over there who will be looking for good partners here in the U.S.," Thompson said.
"We're going to have a four-point effort to have a much stronger international position for the combined company and I think you ain't seen nothing yet," Thompson said. |
