Qwest Communications Inc. burdened with a heavy $14 Billion dollars in debt will look to sell it's long distance network. This network terminates long distance phone calls along with other advanced telecom services to businesses and government agencies.
According to The Wall Street Journal a sale, which could raise between $2 billion to $3 billion, these people said, would largely leave Denver-based Qwest as a regional provider of telephone and Internet services to consumers.
Potential bidders include companies with similar networks, such as Qwest's larger rivals, AT&T Inc. and Verizon Communications Inc., and smaller players like Level 3 Communications Inc. and TW Telecom Inc.
It seems the long distance market has finally caught up with Qwest and they must sever the arm to save the body. The regulated Qwest side of the company still hold value as the incumbent local exchange carrier. It seems the unregulated side of the company, might very well be a deteriorating asset.
Qwest operates a tier one internet backbone where the demand for the services is continuing to increase and the pricing is dropping fairly regularly over the past few years.
If the long distance business has already dropped and the internet services is seeming to slide, Qwest should probably look to make a move rather quickly.
Right now Qwest has a market cap of $6.5 Billion and it has $565 million in cash on hand.
If the pricing is going to trend downward, even with the sale of $3 billion, the ocean of debt they are swimming in may make their share holders a little nervous.
The good thing is the asset is not going anywhere, it just may change the color of the sign the lights up the Denver skyline.
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