Qwest returns to profit as costs decrease

Qwest Communications International, the third-largest US telecommunications group, on Thursday continued its financial rehabilitation, reporting fourth-quarter and full-year profits compared with losses in the year-earlier periods.

The Denver, Colorado-based group reported fourth-quarter net income of $194m, or 10 cents per share, compared with a loss of $528m, or 28 cents per share, a year earlier.

Revenue rose to $3.49bn from $3.48bn a year earlier. Quarterly operating expenses fell by 4.8 per cent from a year earlier, helped by lower facility costs, depreciation expenses and realignment costs.

For the full year Qwest reported a net profit of $593m compared with a loss of $779m in 2005 as operating expenses fell 5.2 per cent.

The company, which has struggled over the past few years to reduce debt accumulated during the internet boom years, said net debt fell by $1.1bn to $13.4bn at the end of last year.

“We delivered on our objectives for the year,” said Oren Shaffer, chief financial officer. “Margins expanded toward our target of the mid-30 per cent range, free cash flow grew significantly, sustainable profitability was achieved and shareholders were rewarded through our share repurchase programme.”

Like its rivals, Qwest has focused on attracting DSL subscribers and selling “bundles” of voice, data and video services, to offset the continued loss of traditional fixed phone lines.

Qwest added over 165,000 DSL lines in the fourth quarter and 658,000 DSL subscribers for the full year and ended the period with 2.14m DSL subscribers, up 44 per cent from a year earlier.

Meanwhile, the percentage of customers subscribing to a service bundle increased to 57 per cent in the fourth quarter from 51 per cent a year earlier.

Its bundle service includes digital voice, high-speed internet access, wireless and integrated TV services.