Qwest Reports Q2
For the quarter, net operating revenue of $3.1 billion declined 9 percent from the prior-year period. Consistent with the past three quarters, Qwest’s transition from a wireless MVNO model to a reseller model contributed to lower revenue comparisons. Excluding the impact of the wireless transition, revenue declined 6 percent compared to the second quarter 2008. Adjusted EBITDA for the quarter was $1.1 billion, a decline of $52 million, or 5 percent, from the prior-year period. Second quarter results include incremental non-cash pension and OPEB expense of approximately $60 million compared to the second quarter 2008. Adjusted EBITDA margin was 35.3 percent in the quarter, up 150 basis points from the year-ago period. For the quarter, adjusted free cash flow was $657 million compared to $460 million in the second quarter 2008. Year-to-date adjusted free cash flow was $1.0 billion vs. $516 million in 2008.
Under more challenging economic conditions in the second quarter, Qwest delivered strong free cash flow while making significant progress on strategic objectives. Partnership performance remained strong in the quarter with subscriber gains across all strategic consumer products. Building off this success, Qwest recently renewed its marketing agreement with DIRECTV for an additional five years. The company forged a new managed services partnership with IBM to address customer needs within Business Markets. Also in the quarter, Qwest and CURRENT Group, LLC announced a new framework leveraging Qwest’s low latency, secure, DSL network to support Smart Grid solutions.
“Considering the economic environment, I am very pleased with our overall performance in the first half of 2009,” said Edward A. Mueller, Qwest chairman and CEO. “Our commitment to disciplined management is evident in our strong cash flow results. This focus allows us to continue to augment our financial strength and provide tangible rewards for our shareholders. At the same time, we are laying the foundation for stronger performance when we emerge from a tough economy. While current market conditions dictate a cautious approach, we continue to invest in areas of the business that will define our future, including expanded broadband capabilities and significant product development to support continuing demand for our enterprise services.”
Qwest Communications International Inc. (NYSE: Q)