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Qwest Wants More Wireless

Realizing that fellow RBOCs AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ) have seen big wireless gains drive their recent growth, Qwest Communications International Inc. (NYSE: Q) CEO Ed Mueller told analysts today that he wants to increase his company's wireless business through another partnership.

"I think we have much to do in wireless," Mueller said on the company's earnings call today. "We need a partner for voice, but we need a partner for data and broadband data, so as we look forward, we'll need someone to help us with both of those." Mueller said Qwest is looking at everybody, including current wireless voice partner Sprint Corp. (NYSE: S) for this service expansion.

In addition to partnering with Sprint to deliver wireless voice, Qwest also uses a partnership with DirecTV Group Inc. (NYSE: DTV) as its primary method of delivering video services. It has no plans to move away from these strategies in the near future.

Overall, 2007 was a flat year for Qwest in terms of revenues. (See Qwest Reports Q4 and Qwest Stays Frugal in Q4.) Mueller said today that he expects 2008 to be more of the same flat story. But one area that showed lots of promise in 2007, and that Mueller has high hopes for in 2008, is enterprise.

Business revenues were up 2.6 percent, and Mueller thinks there is room for growth, considering the federal government has hardly scratched the surface in handing out contracts for the Networx contract awarded last year. (See 5 Carriers Win Networx Enterprise Contracts.)

"It's small. It's not small because we're losing anything, but because the government's not issuing or moving the contracts," said Mueller. "We've had a full court press to try to get them there."

Mueller says Qwest has ramped up its enterprise data products and its sales force to make a big push towards improving this part of the business. Still, the company's conservative nature is keeping forecasts to low- to mid-single-digit growth in enterprise revenues for this year.

"I guess we're being really prudent," Mueller said.

Prudent or not, Qwest is showing signs of promise, according to at least one analyst. "At the top line, what differentiates Qwest is its enterprise data and Internet business," writes Banc of America Securities LLC analyst David Barden in a research note today. "Adjusting for certain year-over-year differences in the business, we believe the core underlying is growing nearer 7 percent."

Shares of Qwest were up 19 cents (3.7 percent) at $5.32 in late afternoon trading.

— Raymond McConville, Reporter, Light Reading

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