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Qwest Wireless Customers to Use Sprint

Posted on: Monday, 4 August 2003, 06:00 CDT

By CATHERINE TSAI

DENVER (AP) -- Debt-laden Qwest Communications International Inc. (Q) struck a deal Monday to move its wireless phone customers onto Sprint's national network, allowing it to sell off its related assets while still offering wireless services.

"This is a win for us," Qwest chief executive Richard Notebaert said. "We don't have to spend as much capital and we have a national footprint, and we can sell our spectrum and the assets we have. They get 1 million customers pretty quickly, plus strong distribution from us."

Notebaert declined to name potential buyers for Qwest's wireless assets or say what they might be worth.

Under the deal with Sprint, Denver-based Qwest will offer Sprint PCS Vision under its own brand by next year to local residential customers and to business customers nationwide. Qwest will handle sales, billing and customer service.

The terms of the multiyear deal were not disclosed, but Qwest said it would purchase minutes from Sprint. Pricing plans have not been decided.

Qwest serves 1 million wireless customers, but its network is limited to its 14-state region. The companies said they expect most of Qwest's wireless customers to move onto Sprint's network by next year.

Len Lauer, president of the PCS division of Sprint, which is based in Overland Park, Kan., said the agreement gives his company another avenue for selling Spring and puts more traffic on its network.

"For the capital we invest on our network, it gives us a better return," he said.

Sprint had 19 million wireless customers and 2.1 million PCS Vision customers as of June 30.

Qwest has been trying to rebuild following federal investigations into its accounting practices, financial restatements that lowered revenue, changes in leadership and challenges to the phone industry from wireless and cable competitors.

The PCS deal means Qwest can offer wireless service but won't have to keep investing in a network to keep up with competitors like Sprint or Verizon, Kaufman Bros. analyst Vik Grover said.

"That's really beneficial given where they're at," said SoundView Technology Corp. analyst Michael Bowen, who believes the company really needs to focus on its land-line and more conventional telecommunications business.

Qwest is trying to lower its debt, which was about $20 billion earlier this year, by selling assets that include the rest of its phone directory business and the wireless assets, including spectrum.

Separately, union workers at Qwest ratified a two-year contract over the weekend that freezes wages but allows for bonuses if the company meets its earnings goals. The Communication Workers of America contract covers 27,000 Qwest sales employees, technicians and others.

Members of the International Brotherhood of Electrical Workers, which represents about 365 Qwest workers in Montana, ratified a similar deal.

Qwest stock closed up 34 cents at $4.13 Monday, while shares of Sprint PCS, the company's wireless unit, dropped a penny to $6.04, on the New York Stock Exchange.

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