NEW YORK, Sept 29 (Reuters) - A decision by federal
regulators to bar two regional Bell companies from marketing
long distance services on behalf of upstart carrier Qwest
Communications International Inc. (NASDAQ:QWST) had little impact on
the firms' shares Tuesday.
The Federal Communications Commission decision was widely
expected and was already "priced into the stocks," said Scott
Wright, a telecommunications analyst with Fahnestock & Co. Inc.
After the stock market closed Monday, the FCC said the
marketing pacts between Qwest and U S West Inc. (NYSE:USW) and
Ameritech Corp. (NYSE:AIT) violated the 1996 Telecommunications
Act, which limits long distance offerings by the Baby Bells.
Under that law, the Bells cannot provide long distance
service in their home regions until they open their local
telephone markets to competition.
"The FCC had made noises about it -- nobody expected (the
Qwest pacts) to go through," Wright said.
Meghan Kulick, an analyst with Merrill Lynch, agreed: "It
was a long shot. I don't think anyone thought the FCC would
allow this circumvention of the Telecom Act."
Qwest had estimated that its pact with U S West would add
$100 million to $200 million to its 1999 revenues. The company
posted revenues of $570 million in the first six months of
1998.
Since Wall Street did not expect the FCC to approve the
marketing pacts, analysts had not added any potential benefit
into their earnings or revenue estimates for Qwest, Kulick
said.
"This wasn't in anyone's numbers. This (FCC decision) is as
expected. It should not have a negative impact," the analyst
said.
Shares of U S West were up 1/4 to 53-5/16 in morning
trading, while Ameritech was off 1/2 to 49-7/8.
Shares of Qwest were down 2-5/16 to 33-5/16, adding to
losses of more then 2 points on Monday, when rumors of the FCC
decision were circulating.
Analysts attributed today's decline in Qwest's stock more
to general market fluctuations than the FCC decision.
Shares of long distance carriers AT&T Corp. (NYSE:T) and MCI
WorldCom Inc. (NASDAQ:WCOM), which had filed lawsuits to block the
Qwest marketing deals, also appeared unaffected by the FCC
decision.
AT&T was up 11/16 to 58-7/8, while MCI WorldCom was ahead
1/8 to 50.
The Dow Jones Industrial Average was off 21 points to 8087,
while the Nasdaq Composite Index gained almost four points to
1743.
Copyright 1998, Reuters News Service |
