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Qwest settles with merger opponent

The settlement removes a major roadblock to a $10.6 billion acquisition.


Minneapolis St. Paul Star Tribune

By Steve Alexander, Star Tribune

November 8, 2010


Qwest, Minnesota's largest telephone company, got a step closer to being acquired Monday when it announced a settlement with Integra Telecom, one of the biggest opponents of the $10.6 billion deal.

It was the latest step by Denver-based Qwest and its acquirer, Louisiana-based CenturyLink, to win regulatory approval of the merger. Last month, a settlement between Qwest and its unions over jobs and severance removed another barrier to the deal. Qwest has about 3,300 employees in Minnesota, including 2,100 union employees.

The Qwest telephone network stretches over 14 states, so the acquisition must be approved by regulators in several states. The Minnesota Public Utilities Commission is expected to rule on the deal by February.

Even after the settlement with Integra, the Qwest acquisition is still opposed in Minnesota by a handful of smaller competing firms, which like Integra are called CLECs (competitive local exchange carriers) that both use and resell Qwest's network services. In addition, the acquisition is opposed by cell phone company Sprint. The status of another acquisition opponent, cable company Charter Communications, could not be immediately determined.

In the settlement, Integra won several concessions, including promises that the combined Qwest-CenturyLink wouldn't pass on any merger-related expenses to Integra. In addition, Integra acquired the power to veto some changes in the software that runs Qwest's network, and won a promise that Qwest's billing systems wouldn't be changed for about two years. It also won the right to demand an investigation into the cause of any deterioration in the Qwest network services it uses.

Sprint, which is concerned about its costs of using the Qwest network, continues to oppose the acquisition, said spokesman John Taylor in Reston, Va. CenturyLink already charges Sprint higher prices for network access than Qwest does, he said.

Steve Alexander 612-673-4553