Qwest's 2009 forecasts boosted by business, wireless backhaul

Qwest's CFO Joseph Euteneuer is upbeat about the company reaching its earnings and cash flow goals for 2009 and is confident about its prospects for Q1 2010. Speaking during the Bank of America/Merrill Lynch 2009 Credit Conference, Euteneuer said that the ILEC would reach its goal of $4.25 to $4.4 billion in earnings before interest, taxes depreciation and amortization. Going into 2010, Qwest says it will continue to invest in strategic elements of its business, including its Fiber to the Node network, which will pass about 3 million homes while continuing to focus on cost cutting.

Out of its three main services segments (Business Markets, Mass Markets and Wholesale), the Business Markets segment continues to be the shining star for Qwest. Business market revenue, while declining 1 percent to $1.0 billion from the same period in 2008, was still up 1 percent sequentially.

"When you think about our business group, what makes them successful is the fact that they can offer the breadth of services and the capabilities of an AT&T or Verizon but have the nimbleness of all the small providers," Euteneuer said. "So when you think about the economy this past year and people downsizing their IT or telecom staffs, the people that were left needed people that could be a partner with them in their solution and stick with them from cradle to grave."

Along with business market growth, Qwest's wholesale division, while not as profitable as the business segment, is finding its biggest growing niche in the wireless backhaul market. Although it does not have a wireless network of its own, Qwest is reaping the rewards of the ongoing appetite for wireless services as a provider of wholesale wireless backhaul. Qwest revealed that it has signed on at least two major unnamed wireless operators and it's about to bring on a third. To satisfy the wireless backhaul drive, Qwest has taken a multi-purpose or integrated fiber build out approach that simultaneously can satisfy its ongoing FTTN deployment for consumers, business services and cell sites.

"To date, we previously deployed fiber for our Fiber to the Node for mass markets, whatever fiber to operating building and to the wholesale group," Euteneuer said. "We now deploy to the cell site and on a guarantee contract with a known return. Now that we have that known return, most of the cell sites are in areas that are either passing business buildings or passing communities and therefore it's a reduction of our capital to do a lateral off the business buildings, the nodes for the home, etc.

Euteneuer added that "our efficiency in capital burn on a going forward basis is going to be tremendous as a result of this opportunity to do fiber to the cell site."

For more:
- Reuters has this article
- here's a link to the webcast

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