CenturyTel Profits Triple, Qwest's Plunge

The first quarter earnings reports were released as CenturyTel is in the process of acquiring Qwest.

W. David Gardner, Contributor

May 5, 2010

1 Min Read

In separate first quarter earnings reports Wednesday, Qwest Communications International said its profits plunged 81%, but CenturyTel, which is in the process of acquiring Qwest for $10.6 billion, reported that its net profits more than tripled.

Qwest, the smallest of the former Baby Bell regional telephone companies, said earnings fell to $38 million and revenue fell to $2.97 billion from $3.17 billion in the same quarter last year.

CenturyTel reported that its earnings jumped to $253 million from $67 million in the year-earlier quarter. Revenue in the quarter surged from $635 million in last year's first quarter to $1.8 billion in this year's quarter. CenturyTel, which brands its service as CenturyLink, noted that its acquisition last year of Embarq fueled much of the financial improvements.

"We believe the strategic combination of CenturyLink's and Qwest's employees, assets, and markets will provide significant benefits for our shareholders, customers, and our communities," said CenturyTel CEO Glen Post III in a statement. "We also expect the increased free cash flow, lower dividend pay-out ratio, more diversified revenue base, and enhanced competitive position of the combined company will strengthen CenturyLink's ability to drive long term shareholder value."

Qwest said its earnings were negatively impacted by a one-time charge for employee health care. The Denver-based former Baby Bell had been burdened for years by a lack of its own mobile phone service, a heavy debt load, and the aftermath of a series of accounting and insider trading scandals. However, CEO Edward Mueller has stabilized the company in recent years while seeking a partner.

The new combined company -- to be dominated by CenturyTel -- will operate in 37 states. The stock-swap acquisition is scheduled to close early next year.

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