Touch America Bids for Qwest’s Long Distance
By Stacy Lane Linkmeyer
Touch America (www.in-tch.com), the telecommunications subsidiary of The Montana Power Co., will pay nearly $200 million for Qwest Communications International Inc.’s
(www.qwest.com) long distance services and related business covering a 14-state area.
Qwest must divest of the services to meet FCC
(www.fcc.gov) criteria relative to its approved merger with US WEST Inc.
(www.uswest.com). The divestiture is required to comply with restrictions in the Telecommunications Act of 1996 that prohibit regional bell operating companies or their affiliates from providing long distance services in their local service region.
“This milestone acquisition fits well with our strategy to add customers, sales force and increase revenues on Touch America’s rapidly expanding national fiber-optic network,” says Robert P. Gannon, chairman and CEO, Montana Power/Touch America in a press statement. “The service area is a part of the country we know well, as we have had infrastructure in place for some years that matches much of the service region Qwest is divesting.”
Under terms of the transaction, Qwest will sell Touch America its in-region business, including 1+, and related wholesale and private line services. These services are provided to about 250,000 customers and generate approximately $300 million in annual revenues.
Touch America also will buy some Qwest physical assets, and it will offer to employ Qwest’s sales agents in the 14-state region
Qwest does not need to divest its interLATA business outside the U S WEST region, so customers in those regions are not affected. Also, Qwest may reenter long distance market once it has satisfied Telecom Act.