Qwest, CenturyTel lose 1.8 million phone customers in a year
The Denver Post
Proposed merger partners Qwest and CenturyTel continue to bleed land lines, reporting Wednesday that they lost nearly 1.8 million phone customers over the past year.
Excluding one-time tax charges, Qwest reported earnings for the first quarter of $204 million, roughly on par with the $206 million the Denver-based company earned in the comparable quarter last year.
The one-time charges of $166 million dropped net income to $38 million for the quarter. Qwest stock closed up 3.23 percent to $5.42.
The company ended the quarter with 9.7 million land lines, down 11 percent from a year ago.
Monroe, La.-based CenturyTel, which does business as CenturyLink, saw its land lines, including those from recently acquired Embarq, drop 8 percent to 6.9 million.
Traditional phone operators are stuck in a years-long wireline decline as customers depend only on cellphones or switch to digital voice offerings from cable companies. Qwest chief operating officer Teresa Taylor said that while losses continued during the quarter, the company is doing a better job of retaining phone customers.
“We are seeing that access lines are – the loss of it is stabilizing,” Taylor said.
Qwest said that its broadband subscribers increased 5.3 percent to 2.9 million. The company’s faster Internet service – via its fiber-to-the-node buildout – is now available to 3.8 million residential customers and will reach 4.5 million by year’s end. The service has 480,000 subscribers after adding 64,000 during the first quarter.
As has been the company’s trademark in recent years, cost cuts helped Qwest stay profitable.
During the quarter, revenue fell 7 percent to $3 billion, while operating expenses declined 9 percent to $2.4 billion. The company, which cut 2,800 jobs in 2009, now employs 29,500 after shedding another 600 jobs during the first three months of the year.
Qwest and CenturyTel have said merging will make them a stronger company with a diversified revenue stream. They also highlighted the benefits of further cost reductions.
In response to an analyst question about employee reaction to the $22 billion deal, Qwest chief executive Ed Mueller said it has “generally been good.”
“It all depends on how you’re personally impacted,” he said.
Employees in Denver are expected to feel the brunt of the cost cuts as duplicate back-office operations are eliminated. The combined company will be based in Monroe and led by CenturyTel chief executive Glen Post, who has said he is leaning toward keeping the CenturyLink name. A decision on branding hasn’t been made.
“We always look at ourselves as not a Denver company,” Mueller said. “We are a national company. And our employee body is excited about the security of a better financial future.”
Mueller and three other Qwest board members will join CenturyTel’s board after the merger, expected to close by April 2011. Mueller said the other board seats haven’t been selected.
It could be a few months before shareholders vote on the deal, which also requires regulatory approval.
CenturyTel also reported earnings Wednesday, its numbers boosted by the Embarq acquisition.
CenturyTel’s net income rose to $279.2 million in the first quarter, up 241 percent from the $81.9 million earned in the first quarter of 2009. Sales rose to $1.8 billion from $635.4 million over the same period. Both numbers were boosted by the Embarq acquisition.
CenturyTel closed at $34.67, up 1.76 percent.
Andy Vuong: 303-954-1209, email@example.com or twitter.com/andyvuong