AUSWR
The Association of U S West Retirees
 

 

 

Questions and answers on Qwest-CenturyLink deal

 

Minneapolis / St. Paul Business Journal

by Greg Avery and Mark Harden

March 31, 2011

 

Here are some key questions and answers about CenturyLink Inc.'s purchase of Denver's Qwest Communications International Inc., which should close on Friday.

Q: What is the purchase worth?

A: The deal involves a stock swap of $10.6 billion and the assumption of nearly $12 billion in debt.

Q: What will the new company be named?

A: CenturyLink. The Qwest name may be retained for certain products, however.

Q: Where will the company be headquartered?

A: At CenturyLink's Monroe, La., headquarters. But the company says it will "maintain a key operational presence in Denver, including a regional headquarters, the Qwest Business Markets Group."

Q: What happens to the big blue sign on the Qwest tower in downtown Denver?

A: It's expected to come down. And there may not be a CenturyLink sign to replace it, since the signing rights come with the master lease on the 52-story 1801 California St. building, and Qwestís lease expires mid-2012. It has been moving Denver-based personnel to other sites.

Q: What will be the combined company's new territory?

A: The merger will create a telecom serving 37 states with about 5 million broadband customers and 17 million phone lines. Qwest alone operates in Colorado and 13 other states; CenturyLink has a 33-state territory.

Q: Where will the new company rank among telecoms?

A: CenturyLink will be the nation's No. 3 local-phone company, behind AT&T Inc. and Verizon Communications Inc.

Q: Why would CenturyLink buy a bigger telecom thatís also losing landline customers to wireless services?

A: Larger scale is expected to help insulate traditional telecoms as they shift to being mainly sellers of high-speed Internet, not voice, services. The value of the combined company could give it more resources to build its own wireless service or acquire a wireless company.

Qwestís business markets unit was a big attraction for CenturyLink, too. CenturyTLink hasnít provided voice and data services to national businesses and government agencies, and thatís the fastest-growing part of Qwest.

CenturyLink also expects to reduce its federal tax bills by $1.7 billion in coming years by using $5.8 billion in corporate income-tax credits Qwest built up from losses it had early in the decade. The merged companyís cash flow benefits from the credits.

Q: What happens to Ed Mueller?

A: The Qwest CEO will serve on CenturyLink's board but will not be a management officer of the company.

Q: What will Qwest shareholders get out of this?

A: Qwest stockholders will get 0.1664 shares of CenturyLink for every Qwest share they now own. Current Qwest shareholders will wind up owning 49.5 percent of the combined telecom. CenturyLink shareholders will have the remaining 50.5 percent.

Q: Who will run the combined company?

A: CenturyLink officers will, for the most part. The management will include:

  • Glen Post III, CEO and president.

  • R. Stewart Ewing Jr., CFO.

  • Karen Puckett, COO.

  • Christopher Ancell, president of business markets group.

  • William Owens, chairman of the board.

gavery@bizjournals.com