DENVER, July 18, 1999 - Qwest Communications International Inc. (Nasdaq: QWST) and
The combination of Qwest and
The combined company expects to realize revenue synergies of $12 billion over a five- and-one-half-year period after closing. There also would be financial and operational scale and scope through lower unit costs realized by serving an expanding base of more than 29 million customers, including U.S. and European multinational firms. It is expected that the combination will be accretive to Qwest's earnings per share in the first year following completion of the transaction.
Separately, Qwest announced that it had withdrawn its offer to acquire Frontier Corporation.
The top executive position in the new company will be held by Joseph P. Nacchio, who will continue as Chairman and CEO of Qwest. Solomon D. Trujillo, now Chairman, President and CEO of
Mr. Nacchio, Mr. Trujillo and Philip F. Anschutz, now the Chairman of the Board of Qwest, will form an Office of the Chairman of the new company, which will oversee general corporate strategy, annual budgets and goals, as well as approval of any acquisition or disposition of a business, and the allocation of capital resources. Mr. Anschutz will serve as non-executive Chairman of the combined company's 14-member Board of Directors, which will be represented equally by the two companies, including Messrs. Nacchio and Trujillo.
Mr. Anschutz said, "I am proud to announce the merger of two very different industry leaders, Qwest and
"This combination will create significant benefits for customers, employees and shareholders," said Mr. Trujillo. "Together we will create a powerhouse with end-to-end reach, innovative products, integrated wireline and wireless services, and broadband and Internet capabilities that are truly cutting edge."
Mr. Nacchio said, "This transaction positions Qwest to be the benchmark, large-cap growth company in the new millennium. Together we will have the scale, scope and growth characteristics to deliver greater long-term value for our shareowners.
"We will achieve our targets by giving customers more choice and superior service, bringing competition and the best in telecommunications services to the marketplace. In addition, we will move rapidly to achieve the necessary freedoms to offer long-distance service to all of our customers," Mr. Nacchio said.
Mr. Anschutz said, "Joe Nacchio has led Qwest through the completion of the country's first fiber-optic network and into Qwest's position as the world's pre-eminent Internet-based communications company. His truly remarkable insight into the convergence of traditional communications and the most sophisticated Internet technology and applications has created the global communications giant for the next millennium, reaching from the United States to Europe, Asia and Mexico. Joe's vision and tenacity will drive the new Qwest towards achieving our goal of creating the most complete advanced, reliable Internet-based communications company in the world."
Mr. Anschutz also said, "Sol Trujillo has taken a traditional regional Bell company and transformed it into a visionary, technologically advanced company.
Mr. Anschutz added, "The new Qwest will create solid, value-oriented growth, and will provide business and residential customers with the best and most reliable service available."
Terms of the Transaction
Under terms of the merger agreement, Qwest will issue shares of its common stock having a value of $69.00 for each share of
The obligation, if necessary, under the "collar" may be satisfied in whole or in part with cash if Qwest's average stock price is below $38.70 per share. In determining the cash amount for the collar, Qwest and
The Boards of Directors of both Qwest and
In connection with the termination of the
People, Systems to Grow Internet Services
The combined company will employ approximately 64,000 people. Its headquarters will be located in the
Mr. Nacchio and Mr. Trujillo said that the new company will draw upon its combined employee base and billing and provisioning systems to achieve greater local connectivity for new Internet services. Building from
Qwest said that as of the merger closing it would divest itself of its interLATA (Local Access and Transport Area) long-distance services in the
Technology Will Drive the Growth of the New Enterprise
To enhance its ability to provide advanced applications and services, the new company will continue to build on Qwest's and
In addition, Qwest and
Customer Benefits of the Transaction
The combination of the companies will generate many additional customer benefits:
- The Qwest/U S WEST merger increases competition because its fiber and DSL broadband technology offers the most substantial and distinctive alternative to AT&T's cable-telephony service.
- As the nation's leader in DSL high-speed Internet access,
U S WESTcurrently has deployed the service in more than 40 cities to central offices serving 5.5 million customer households. U S WESTplans to aggressively deploy DSL to customers in major markets across the U.S. and ultimately worldwide.
- The implementation of the shared growth strategy of each company, including deployment of the industry-leading Internet Protocol (IP) platform, will accelerate local broadband connectivity services for millions of customers.
- Enhanced leadership in value-added Internet services through the combination of seven Qwest CyberCenter Web-hosting facilities with
U S WEST!NTERPRISE data networking business, which currently serves 225,000 Internet access customers.
- Qwest's next-generation network allows customers to navigate the Internet at high speed in the U.S. and beyond?
- Qwest's reliable, scalable and secure Macro Capacity Fiber Network, spanning 18,500 miles in the U.S., combined with
U S WEST40,400-mile network, as well as Qwest's undersea cables connecting the U.S. with Japan and the Asia-Pacific region.
- Qwest's venture with KPN, the Dutch telecommunications company, to build and operate a high-capacity European fiber-optic, IP-based network - extending 2,100 miles today and 8,100 miles when it is completed in 2001 ? to be linked to Qwest's U.S. network via undersea cables.
- Qwest/U S WEST will continue to aggressively deploy advanced PCS wireless services.
U S WESTcurrently offers its innovative, integrated Advanced PCS service to some 300,000+ customers throughout the West and Midwest.
- U S WEST Dex continues to be an industry leader with the availability of its Internet Yellow Pages. This service provides customers with continuously up-to-date directory information available from the Internet. More than two million users visit the site monthly, a threefold increase from early 1998.
- Qwest/U S WEST commits to aggressively taking steps to enter the long distance market across
U S WEST14-state region.
Financial Benefits of the Transaction
The combined company expects to realize revenue synergy of $12 billion over a five-and-one-half-year period after closing. In addition, the combined company expects to achieve cost savings of $4.4 billion, and capital-expenditure synergies in excess of $2 billion over the period.
After closing, the new company initially will pay a quarterly dividend of $0.0125 per Qwest common share.
Qwest's financial and legal advisers on the transaction are Donaldson, Lufkin & Jenrette and Davis Polk & Wardwell, respectively.
About U S WEST
U S WEST (NYSE: USW) provides a full range of telecommunications services ? including wireline, wireless PCS, data networking, directory and information services ? to more than 25 million customers nationally and in 14 western and midwestern states. More information about U S WEST can be found on the Internet at www.uswest.com.
Qwest Communications International Inc. (Nasdaq: QWST) is a leader in reliable and secure broadband Internet-based data, voice and image communications for businesses and consumers. For more information, please visit the Qwest web site at www.qwest.com.
This release contains forward-looking statements that involve risks and uncertainties. These statements may differ materially from actual future events or results. Readers are referred to the documents filed by Qwest and
The Qwest logo is a registered trademark of Qwest Communications International Inc. in the U.S. and certain other countries. The
|Qwest Media Contact