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Qwest 1Q Income Nearly Triples

Qwest Communications International Inc. nearly tripled its net income in the first quarter, thanks to continued adoption of its bundled services, relaxed regulation and cuts in areas including retiree benefits.

The nations third-largest local phone company reported net income of $240 million, or 12 cents per share, over $88 million, or 5 cents per share, a year ago. Its revenue was down slightly; it went from $3.48 billion in the first quarter of 2006 to $3.45 billion for the period ending March 31, 2007.

However, the company shaved its total net debt by $940 million over the past year. It now carries $13.8 billion in debt; a year ago, it owed $14.7 billion. Qwest was hit hard by the tech bubble that burst in the early 2000s, and it also has had to make up for accounting scandals that plagued it several years ago.

Qwests stock was up on the earnings news; share prices rose 19 cents to reach $9.07 at mid-morning on Tuesday. The 52-week high is $9.22

The carrier credited much of its steadily improving financials to demand for its voice, video and wireless packages.

On the retail side, video outpaced all other consumer services subscribership grew 131.1 percent in the first quarter of 2007 over the same period in 2006. Qwest also recorded a 3.6 percent increase in wireless customers and a 37.4 percent jump in high-speed Internet users.

Growth on the business side wasnt as strong, however. Wholesale revenue numbers remained flat and enterprise sales fell by 4 percent. That was because this quarters financials didnt include a large data equipment contract, like they did last year, Qwest said.

The company like its Bell sisters is losing wireline customers to cellular and VoIP services. Demand for traditional phone service dropped 6.8 percent to 13.6 million. Still, Qwests earnings per share stayed strong because it was cutting enough costs to even out its losses, analysts said.

Qwests overall operating expenses declined 6.2 percent. The carrier attributed those savings to several factors: it did not have storm cleanup, as it did a year ago, in the western and Pacific Northwest states it serves; it had lower facilities costs; and it continued to shrink annual benefit expenses.

Qwest said it hopes to keep cinching up its belt now that it has become the first Bell under the 1996 Telecom Act allowed to combine local and long-distance operations in its territory. Qwest says the relief granted by the FCC means it will save money and improve customer service; the carrier serves 14 states.

Qwest also is forecasting a jump in sales now that it has been named a contractor in the federal governments $20 billion Networx Universal initiative. Qwest will compete against AT&T Inc. and Verizon Business Services (formerly MCI) for business from U.S. agencies throughout the world.

Qwest Communications International Inc. www.qwest.com


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