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

To: MangoBoy who wrote (1304)	5/21/1998 1:22:00 AM
From: MangoBoy	Read Replies (2) \| Respond to of 6846

[WSJ: AT&T Invites Regional Bells to Sell Long-Distance Service to Customers] (can AT&T compete with QWST on price? i don't think so... -- mark) SECAUCUS, N.J. -- AT&T Corp., in an extraordinary overture, invited the regional Bell telephone companies to sell its long-distance service to their local phone customers. If the Bells accept, it would mark the first time the long-distance company has teamed up with the local phone monopolies it spawned after the breakup of American Telephone & Telegraph Co. in 1984. It could also be a political maneuver on the part of C. Michael Armstrong, AT&T's new chairman, by shining a light on Bell mergers and recent long-distance marketing deals that would allow the Bells to package their local services with long-distance rivals. If AT&T is allowed to proceed with the Bell marketing, it could recapture market share quickly. If it isn't, it might be able to make the case that it is being discriminated against. "I don't see how we can lose on this one," Mr. Armstrong told reporters at the company's annual meeting here Wednesday. Local-phone giant GTE Corp. also received an invitation to participate in a marketing deal, AT&T said. AT&T's gambit comes after it challenged similar marketing arrangements between long-distance upstart Qwest Communications International Inc. and two Bells, U S West Communications Group Inc. and Ameritech Corp. AT&T failed on Friday to win a temporary restraining order in Chicago federal court that would have delayed Ameritech from selling Qwest service in its five-state territory. A ruling in a Seattle federal court won't come for another two weeks. Motives Are Questioned U S West responded to AT&T's offer by saying it would welcome selling service from any company "sincerely interested in offering a better long-distance value to our customers." But, it added, "If AT&T is truly interested in offering our customers a better long-distance deal, they would be better off working with us instead of filing lawsuits attempting to block this pro-consumer program." Ameritech echoed its fellow Bell's sentiment, noting that it had invited AT&T and others to submit bids for such a marketing pact. AT&T declined to participate, Ameritech said. "Now AT&T wants to play catch up," the company said. James A. Kahan, SBC Communications Inc.'s senior vice president for corporate development, said the Bells would consider services and offerings that benefit its customers. But, he added, "My sense is that we'd much rather enter the long-distance market with our own services... That way we can differentiate ourselves in the market." Qwest Chief Executive Joseph Nacchio said AT&T was playing follow the leader. "We'll be delighted to compete with them with our newer network and lower cost structure," he said. "If they try to cut their prices across-the-board to 10 cents a minute to match our offer it will take billions out of their annual earnings." He added, "I hope this isn't a ploy by AT&T to block a smaller company from reaching its customers." Denies 'Dual' Message Mr. Armstrong denied AT&T was talking out of both sides of its mouth by reaching out to the Bells at the same time it is suing to stop the Qwest deals. In a letter to the Bell companies, sent via fax Tuesday night, he noted that AT&T still opposed the Qwest agreements on legal grounds. But the letter added that "should these arrangements be found lawful," AT&T "would also like to provide our customers the convenience of one-stop shopping... . The combination of the AT&T and [Bell] brands would be a valuable and attractive addition to the choices customers now have." Investors applauded the plan. AT&T rose $2.4375, or 4.3%, to $58.875 in New York Stock Exchange composite trading. AT&T's move could also turn up the heat on the $55 billion merger plans of SBC Communications and Ameritech by raising the specter that sweeping telecom legislation, enacted two years ago, has done little to promote competition and instead is encouraging the telecom giants to rebuild the old AT&T monopoly. Mr. Armstrong told shareholders that such "horizontal" mergers hurt competition by reinforcing the Bell companies" monopoly power. Protecting Its Flanks The Bell overture underscores how Mr. Armstrong is stepping up AT&T's efforts to protect its flanks as it moves into new markets in search of growth. He said AT&T is determined to grow as fast as the telecom market, "doubling our growth rate this year over last year and doubling it next year over this year." That is a tall order. AT&T's growth has been flat; its consumer business is shrinking, and its wireless business has slowed tremendously as it refocuses marketing on higher-spending consumers. Still, Mr. Armstrong has an ambitious strategy to expand AT&T's local, wireless and international operations through investment and marketing. In long-distance services, Mr. Armstrong noted that 20 million customers now use AT&T's flat-rate pricing plan One Rate, and he said AT&T would encourage the 14 million "occasional-calling" customers to use their phones more frequently by selling them prepaid cards or other services. Mr. Armstrong said AT&T is also mulling offering a so-called dial-around service in which customers can dial a code before a phone number to get a discount. These efforts should help AT&T erase some of the $500 million it currently loses annually servicing these customers, he added. Wireless System Plans In the wireless arena, Mr. Armstrong vowed to transform communications into a "people-to-people experience rather than place-to-place" so that the pocket-phone becomes "as common as a wallet." In local phone services, he said AT&T's planned $11.5 billion acquisition of Teleport Communications Group Inc. would target multiple dwelling units, negotiating with landlords to connect their buildings directly to the AT&T network to bypass the Bells. In Internet services he promised to make the telephone "the most ubiquitous Internet instrument in the world." AT&T is backing its plans with big spending. For the Internet, the company will spend $325 million this year alone beefing up its transmission backbone, and Mr. Armstrong said the company might be interested in buying MCI Communications Corp.'s Internet business and facilities if they comes up for sale as MCI tries to win regulatory approval of its $37 billion takeover by WorldCom Inc. "AT&T should be judged not only by its individual pieces but by the sum of its parts," Mr. Armstrong said. "None of this is science fiction. We have the products. AT&T is on the offense. We will grow this business, and we will build that future."