Qwest (NYSE: Q): Landline losses eat into Q4 earnings, but CenturyLink merger is on track

Qwest (NYSE: Q) is once again feeling the pain of its legacy voice declines as the service provider's revenue declined 3.2 percent to $2.9 billion.

The service provider, which is in the process of merging with CenturyLink (NYSE: CTL), reported $161 million loss, or 9 cents per share, compared with a year-earlier profit of $108 million, or 6 cents per share due to special items including stock-based compensation and merger costs.  

During the quarter, Qwest ended the quarter with 8.9 million total access lines, an 11 percent total drop for the year 2010.

Here's a breakdown of key Qwest metrics:

  • Business Markets: Ongoing demand for IP services and strong data integration sales drove up Qwest's Business Markets revenue 1 percent year over year. However, growth was flat on a sequential basis. Qwest saw that enterprise sales grew modestly from Q4 2009 and down sequentially due to seasonal factors.
  • Mass Markets: Qwest's ongoing drive to expand its Fiber to the Node network helped to offset legacy voice revenues in the fourth quarter. Mass markets segment revenue of $1.1 billion declined 4 percent from the fourth quarter 2009 and was down 1 percent sequentially. As of the end of the quarter, Qwest's collective broadband, video and wireless total connections surpassed five million. During the quarter, Qwest added 92,000 FTTN subscribers, ending the period with 713,000 subscribers, or 25 percent of the subscriber base. Growth of its FTTN-based broadband service was offset by a decline of 77,000 ATM-based DSL subscribers.
  • Wholesale Markets: Qwest's Wholesale Markets segment declined 7 percent year over year compared to an 8 percent annual decline reported in the third quarter and revenue was down 2 percent sequentially. Although the wholesale markets segment income remained flat with the fourth quarter 2009 and declined 2 percent from the third quarter, segment income margin of 68 percent increased 470 basis points year over year and 20 basis points sequentially, mainly due to improved product mix.

Although Qwest's Q4 results were relatively soft, the company said it is on track to complete its merger with CenturyLink by April 1, which is almost exactly a year since it announced the deal. Of course, the two providers still need various state and federal approvals to make that date. The two service providers were dealt a setback last week when the Minnesota Public Utility Commission (PUC) decided to delay their decision on the deal until the beginning of March.

For more:
- see the earnings release
- Reuters has this article
- see CenturyLink's Q4 earnings article
- here's FierceTelecom's Q4 earnings summary

Related articles:
Minneapolis PUC delays decision on CenturyLink, Qwest merger
CenturyLink, Qwest: A new service provider era?
Qwest launches new dedicated E-Line service
CenturyLink, Qwest merger consolidates more of the landline market
CenturyLink gets U.S. antitrust approval to proceed with Qwest acquisition

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