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Technology Stocks : Qwest Communications (Q) (formerly QWST) -- Ignore unavailable to you. Want to Upgrade?

To: RTev who wrote (5194)	10/5/1999 3:17:00 PM
From: RTev	Read Replies (2) \| Respond to of 6846

The regulatory issues facing a merger among BLS, USW, and QWST are not insurmountable, but there are other issues that are far more significant. QWST has already done its mating dance with BLS. It appears that BLS cost QWST time and money during their previous negotiations in the spring. Look at the merger narrative in the QWST/USW merger package. It brings together several reports and rumors that were issued at the time of the merger. USW approached QWST before announcing its deal with Global. "On May 4, a US West representative asked a Qwest representative whether Qwest had any interest in a business combination between US West and Qwest. The Qwest representative said that, in light of other pending matters, Qwest was not then interested in pursuing such a combination." [p I-11] What were the "other pending matters"? The narrative doesn't say specifically what Qwest was considering in early May, but it does say, "In late May and early June, representatives of Qwest and BellSouth entered into discussion regarding various alternatives relating to BellSouths's interest in Qwest, including the acquisition of a control position in, or a combination with, Qwest. The discussions terminated without Qwest and BellSouth reaching agreement on these issues." [p I-13. emph. mine] Had it not been for BLS, QWST might have made a far more favorable merger agreement with USW. Having reached their agreement, it's clear that QWST and USW built into the agreement provisions to protect themselves from any takeover attempt by BLS, the most likely suitor. BLS would have to act quickly (something this lumbering outfit doesn't seem inclined to do). Before the shareholder votes, both USW and QWST are barred from soliciting other offers, but either may entertain an unsolicited offer if both USW and QWST are informed of all aspects of the negotiation. BLS would have to work with both of them. I've said it before, and I'll repeat it. I hope a combination with BLS does not happen. Despite the significant service and back-office problems that both USW and QWST must deal with, I think the combination of these two makes most sense in the long term if it can be done without getting intertwined with BLS. USW is a lean company. It's too lean for the good of its customers, but it is at least the one RBOC that has pared its business to a core business that fits more cleanly with QWST's business. It's a predominantly urban provider that is focused on next-generation technologies. Wireless is just one example. It sold off its wide-spread TDMA licenses in order to focus on PCS service in tightly focused urban corridors (Seattle/Portland, Front Range, Phoenix/Tuscon, and Minneapolis/St. Paul). Those are the very areas where the kinds of wireless data services that benefit from Qwest's network and ASP agreements will have the most traction.