Global telecommunications service provider Qwest Communications International Inc. (Q) on Wednesday posted a 6.2% decline in third-quarter profit as total access lines fell 11.0% from last year. Meanwhile, the company's consumer average revenue per user or ARPU for the quarter advanced 5.4%. The company also cut its forecast for fiscal 2009 capital investments.
Q3 Results
The Denver, Colorado-based company's third-quarter net income was $136 million, down 6.2% from $212 million in the year-ago quarter. Per share earnings totaled $0.08 for the latest quarter, flat with the same period last year.
On average, 17 analysts polled by Thomson Reuters expected the company to post earnings of $0.07 per share. Analysts' estimates typically exclude special items.
The company noted that the most recent quarter results included a 1 cent charge for severance, realignment and restructuring cost and litigation expense. The prior-year results encompassed a 1 cent charge for severance, realignment and restructuring.
Quarterly operating revenues amounted to $3.05 billion, 9.6% lower than the previous year's operating revenue of $3.38 billion. Net operating revenues for the latest quarter includes 36% growth in IP services. Overall reported revenues declined 10% from last year. Thirteen Wall Street analysts had a consensus revenue estimate of $3.07 billion for the quarter.
Excluding the effects of the company's transition to a new wireless business model, revenue dropped 7% year over year.
Strategic services revenue grew 5% to $1.1 billion, while Legacy services revenue fell 14% to $1.7 billion from the previous year. Fewer access lines, from a weak economy and competition, and efforts to improve Wholesale long-distance profitability pressured legacy voice revenue. Customer transitions to IP services impacted legacy data revenue.
Segmental Analysis
Third-quarter revenues at the company's Business Markets segment were $1.03 billion, down 1% from $1.04 billion a year ago. The segment income contribution from Business Markets increased 10.8% to $409 million from the prior-year's income of $369 million. Segment income margin percentage of 39.6 improved 430 basis points from last year, due to lower network costs and improved channel expense efficiencies.
The company's Mass Markets segment witnessed revenue decline of 14% that totaled $1.23 billion, compared to $1.43 billion last year. Segment income for the quarter was $673 million, a slight decline of 0.3%, compared to the previous year's income of $675 million. Segment income margin percentage improved 760 basis points compared to the year-ago quarter.
Total net broadband subscribers increased 5.7% to 2.95 million from 2.79 million subscribers recorded last year, fueled by the demand within the FTTN footprint. Total FTTN subscribers reached 340 thousand or more than 11% of Qwest's total high-speed Internet customers. Total wireless subscribers at the end of the quarter were 786 thousand, up 1.8% from 772 thousand reported at the end of the third quarter of 2008. Further, Qwest added that it would stop providing MVNO services effective October 31.
Qwest added 15,000 DIRECTV subscribers in the quarter. At the end of the period, about 15% of Qwest's primary access line customers also were subscribing to DIRECTV services.
Wholesale Markets fetched third-quarter revenue of $700 million, a decline of 14.2%, compared to $816 million in the previous year, primarily due to lower long-distance revenue. Wholesale segment income edged down 0.2% to $459 million from $460 million in 2008. Reflecting the elimination of low-margin revenues, Wholesale segment income margin percentage improved 920 basis points year over year.
Other Metrics
Operating income for the latest quarter rose 6.8% to $485 million from $454 million last year. Total operating expenses for the quarter was $2.57 billion, down 12.2% from $2.93 billion incurred in the prior-year quarter, including cost of sales of $932 million, down 24.4% from the year-ago quarter.
Income tax expense for the quarter increased 2.7% to $75 million from $73 million reported in the same quarter of last year.
During the third quarter of 2009, consumer average revenue per unit or ARPU advanced 5.4% to $59 from $56 reported in the corresponding quarter of the previous year. Total employees at the end of the third quarter were 31,300, compared to 3,400 or 10% from the previous year.
Total access lines declined 11.0% to 10.6 million from a year ago, and total mass markets connections decreased 5.7% to 11.6 million from last year.
Year-To-Date Synopsis
For the nine-month period, the company reported net income of $554 million or $0.32 per share, compared to $475 million or $0.27 per share in the year-earlier period.
Operating revenues totaled $9.32 billion, a decline of 8.3%, compared to $10.2 billion reported in the nine months ended September 30,2 008.
Future In Focus
Looking ahead, the company currently projects adjusted EBITDA at the upper end of its prior guidance, which called for a range of $4.25 billion - $4.4 billion. Full year capital investments are now estimated to be $1.6 billion or lower, versus the prior outlook of $1.7 billion or lower.
As a result of stronger-than-expected performance to date, the company raised its full year adjusted free cash flow to a range of $1.6 billion - $1.7 billion, from the previously communicated range of $1.5 billion - $1.6 billion.
Peer Review
Among Qwest's rivals, Verizon Communications Inc. (VZ) posted a decline in third-quarter profit that totaled $2.89 billion or $0.41 per share, compared to $3.19 billion or $0.59 per share a year ago, reflecting higher merger and restructuring costs. Operating revenues grew 10.2% to $27.3 billion from $24.8 billion in the previous year. On a pro forma basis, operating revenue growth was 0.6%.
Another peer, AT&T Inc. (T) reported third quarter net income of $3.19 billion or $0.54 per share, down from $3.23 billion or $0.55 per share in the year-ago quarter, on continued weakness in the wireline business. Total operating revenues decreased 1.6% to $30.86 billion from $31.34 billion last year. The company noted that growth in wireless and advanced wireline data services in large part offset declines in voice, legacy data and print advertising products.
Yet another competitor, Sprint Nextel Corp. (S) is due to release its third-quarter results on October 29, with analysts projecting a loss of $0.15 per share on sales of $8.09 billion.
Stock Quotes
Qwest Communications shares, which have been trading between $2.10 and $4.87 in the past 52 weeks, closed Tuesday's trading session at $3.45.
For comments and feedback contact: editorial@rttnews.com
June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.