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To: Glenn McDougall who wrote (11862)	6/14/1999 12:52:00 AM
From: pat mudge	Respond to of 18016

The Financial Times: Monday June 14 1999 Qwest bids underline consolidation By William Lewis in New York Qwest Communications, a fast-growing Denver-based telecoms group, yesterday unleashed two unsolicited offers worth a total of $55bn (£34bn) for US West and Frontier, two telecoms companies that have both recently agreed to merge with Global Crossing. If the two deals are successfully completed, the combined company would have a market capitalisation of $87bn and be headquartered in Denver. Together the bids represent the largest ever unsolicited takeover offer, providing further evidence of rapid consolidation in the US telecoms industry. Qwest will also assume $11.4bn of debt, making the headline value of the two separate bids $66.4bn. Joseph Nacchio, Quest's chairman and chief executive, said the proposed deals would enable the Denver-based group to bring internet services and broadband to more than 31m consumers and businesses in the US. "The internet communications powerhouse we intend to create will bring together the three companies' network infrastructure, applications and services, as well as their customer distribution channels," he said. Global Crossing, Frontier and US West could not be reached for comment last night. However, one person close to Global Crossing said: "If they get these off us, there will be hardly anything left of Global Crossing." There has been intense speculation about Qwest mounting an offer for US West, with investors puzzling how Qwest would financially structure a deal. Qwest has designed both offers so US West shareholders will receive more if Frontier agrees to a Qwest takeover, and vice versa. Based on the closing price of Qwest's stock on Friday, Qwest is offering $80 for each US West share if Frontier agrees to be taken over by Qwest. If Frontier does not agree to be taken over by Qwest, US West will offer $78 for each US West share. This means Qwest is offering to pay between $40.2bn and $41.3bn for US West, and will also assume $10bn of debt. Qwest said that assuming Frontier agrees to a takeover, Quest's offer for US West represents a 45.8 per cent premium to US West's closing share price on Friday, and a 28.5 per cent premium to US West's stock price close on May 14, the last trading day before it announced the merger with Global Crossing. For Frontier, Qwest is offering a combination of stock and cash. Based on Qwest's stock price on Friday, it values each Frontier share at $75, if US West also agrees to a merger with Qwest, and $73 a share if US West does not agree. This values Frontier at between $13.2bn and $13.6bn, and Qwest will assume debt of $1.4bn. Based on Qwest's closing stock price on Friday, its offer for Frontier represents a 35.3 per cent premium to Frontier's closing price on Friday. It is also 68.1 per cent above Frontier's close on March 16, the day before it announced a merger with Global Crossing. >>>>>

To: Glenn McDougall who wrote (11862)	6/14/1999 1:00:00 AM
From: pat mudge	Read Replies (2) \| Respond to of 18016

FT profile on Qwest: >>> PROFILE: Qwest Could the telecoms industry soon find itself with too much bandwidth? Qwest, the fast-growing US carrier and self-styled leader of the "bandwidth barons", certainly hopes not. The question might seem strange given the perception that explosive growth in internet traffic is swamping telephone networks. But in the US at least, there are several ambitious projects to create massive new networks optimised for internet protocol (IP) traffic. Some contrarian analysts warn of the prospect of a bandwidth glut, albeit short-lived. This Domesday scenario certainly does not enter into the thinking of Qwest, which is close to completing one of the biggest IP networks. Two years ago, when Qwest went public, it was an unfamiliar name. But last June, Qwest vaulted to become the fourth largest long-distance carrier by buying LCI International for $4.4bn. Analysts praised the deal as it combined LCI's marketing skills with Qwest's next-generation IP network. It also seemed to be a slap in the face for the "Big Three" long-distance operators - AT&T, MCI and Sprint - which have been slower to jump on the IP train. Since the LCI acquisition, Qwest's stock price has tripled. Qwest's 18,500 mile network is due to be completed this month and Joseph Nacchio, chairman and chief executive, claims it is the highest speed commercial IP network currently available. "[It will] drive innovation of a new set of high level internet-based applications and services for customers," he says. The network is already in use and early customers include Delta Air Lines, Ford and America Online. Qwest's ambitions have also turned on Europe. In early 1998, it bought EUnet, a pan-European internet backbone network, and it recently folded this activity into a joint venture with KPN, the large Dutch carrier. Their new venture, KPNQwest, is building a new pan-European IP network which, when completed in 2001, is expected to cover almost 15,000km and connect more than 40 big cities. Back in the US, Qwest has recently attracted strategic investments from both Bellsouth and Microsoft. Bellsouth, a regional operating company, has agreed to invest $3.5bn for a 10 per cent stake in Qwest and hopes to sell Qwest long-distance voice and data services in the southern US, if regulators allow the move. Microsoft has invested $200m in Qwest and wants to use its infrastructure to offer e-commerce and web hosting services. Qwest estimates this new business could generate revenues of about $150m over the next two years. Mr Nacchio hopes these tie-ups coupled with Qwest's bulging portfolio of big-name corporate clients will go some way to silence those critics who traditionally complain that, while Qwest is good at laying fibre optic infrastructure - its original business was constructing networks for carriers such as GTE and WorldCom - it has limited experience as a telecommunications service provider, particularly in the corporate market. Back in 1997, Qwest got most of its revenues from constructing networks for other carriers. But Mr Nacchio, a former AT&T executive, was already hatching plans for Qwest to become a leading carrier in its own right. So alongside every fibre optic cable Qwest laid for its customers, it laid another for its own use. In this way, Qwest's competitors covered much of the cost of the construction of its own network. Qwest also owns the rights of way along the railway tracks of Southern Pacific - Qwest was spun off from the US railway company in 1988. This allowed Qwest rapidly to stretch optical fibre coast-to-coast alongside the tracks. The network construction phase is now largely completed and the latest financial results confirm Qwest has made the transition from cable layer to fully-fledged telecommunications company. Prior to the LCI acquisition, in the first quarter of 1998, communications services generated less than 24 per cent of the total revenues of $177m. A year later, services revenue in the first quarter on 1999 was$737m, 84 per cent of the $878m total >>>>