Don’t Expect Major Revenue Growth at Qwest Over Next Few Years

Implications: 1.      Qwest might as well be considered an independent telco. 2.      Its major strategy is the following: achieve higher-speed DSL, look for funds from the federal government for rural applications, and avoid offering its own video service. 3.      Qwest has not changed very much with its emphasis on cost reduction.

Analysis:  We do not expect there to be more than four to five percent CAPEX growth in 2009 and 2010 at Qwest.  Therefore, “the really compelling case” to raise it will remain elusive for quite a while.   

So, Qwest will pretty much continue to plod along in the foreseeable future.  If one did not know any better, there is almost the sense that the telco would not necessarily mind a slow-moving economy indefinitely to blame for inadequate revenue growth.  

The idea of straining to send four to five HD streams to every house with a FTTN approach is ridiculous when it can easily be done with its satellite TV partnership.  The CEO also appears to be disingenuous when he states that the “network is in fine shape.”  

So, continue to expect more downsizing in terms of personnel at Qwest.  And it is looking forward to a lot more “reduction [in] facility cost.”  

A person at the conference astutely pointed out that Qwest would become “tremendously accretive” if it merged with a large independent telco.