Denver, October 31, 2000 — Qwest Communications International Inc. (NYSE: Q), the broadband Internet communications company, today announced an agreement with McLeodUSA for voice and data communications services worth approximately $600 million in revenue to Qwest over three years. The agreement represents the largest wholesale contract in Qwest’s history.
"We said from day one of our acquisition of U S WEST that Qwest was going to aggressively move to open up all markets to competition and this is further proof we're doing that," said Joseph P. Nacchio, Qwest Chairman and CEO.
"This multi-year, multi-product, multi-million-dollar agreement will make it possible for McLeodUSA to serve our customers in Qwest territory through an expanded set of services, products and platforms," said Steve Gray, President and COO of McLeodUSA. "We believe this agreement will generate revenue and capital expenditure savings while allowing us to harness the potential of Qwest system components and services."
"We are pleased with Qwest's commitment to improve service to consumers, its progress toward opening the marketplace to competition, and the new relationship this agreement establishes between McLeodUSA and Qwest management," Gray added.
The industry-first agreement contains significant financial and customer benefits, including the sale of additional features and information services that Qwest has not offered competitive local exchange carriers (CLECs). This enables McLeodUSA to offer its customers such popular services as DSL and voice messaging while increasing Qwest's revenues and allowing cost recovery moving forward. Additionally, this agreement creates an incentive for McLeodUSA to use Qwest's high-speed broadband network along with its own facilities. This long-term agreement is unique in the industry in that it was negotiated on a business-to-business basis instead of being arbitrated by regulators.
"Qwest has a long history of valuing its wholesale customers and seeking solutions to their business needs. This agreement continues that commitment and extends it to the local network," Nacchio continued. "We want to do business with our wholesale customers – who also happen to be our competitors – not because we're forced to by regulation, but because it fits our business model, it's smart business and it's time."
In September, Qwest announced a series of sweeping policy changes, including new wholesale products and services designed to increase competition for homes and businesses. These changes, along with the agreement announced today, may help Qwest gain swifter approval to reenter the long-distance business. Because of its merger with U S WEST, Qwest cannot provide long-distance service to customers in the 14 states where it provides local service until the company can prove to regulators that its local markets are open to competitors.
"This is a real win-win situation: McLeodUSA is able to better serve its customers and Qwest receives substantial commitments for new business from an important wholesale customer," Nacchio stated. "An added benefit is that increased competition will help bring Qwest one-step closer to offering our customers long-distance services."
Qwest Communications International Inc. (NYSE: Q) is a leader in reliable, scalable and secure broadband Internet-based data, voice and image communications for businesses and consumers. The Qwest Macro Capacity® Fiber Network, designed with the newest optical networking equipment for speed and efficiency, spans more than 104,000 miles globally. For more information, please visit the Qwest web site at www.qwest.com.
McLeodUSA provides selected telecommunications services to customers nationwide. Integrated communications including local services are currently available in several Midwest and Rocky Mountain states; long distance and advanced data services are available in all 50 states. McLeodUSA is a facilities-based telecommunications provider with 361 ATM switches, 37 voice switches, nearly 824,000 local lines, and over 9,000 employees. The Company recently expanded its marketplace for advanced data and Internet services to all 50 states through the acquisition of Splitrock Services, Inc. The network acquired in the Splitrock transaction is capable of transmitting integrated next-generation data, video and voice services, reaching 800 cities and 90 percent of the U.S. population. In the next 12 months, McLeodUSA will distribute 30 million directories in 26 states, serving a population of 52 million. McLeodUSA Incorporated is a Nasdaq-100 company traded as MCLD. The Company's web site is available at www.mcleodusa.com.
This release may contain 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 with the Securities and Exchange Commission, specifically the most recent reports which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements, including potential fluctuations in quarterly results, dependence on new product development, rapid technological and market change, failure to maintain rights of way, financial risk management and future growth subject to risks, adverse changes in the regulatory or legislative environment, and failure to achieve the synergies and financial results expected from the acquisition of U S WEST, Inc. This release may include analysts' estimates and other information prepared by third parties, for which Qwest assumes no responsibility. Qwest undertakes no obligation to review or confirm analysts' expectations or estimates or to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
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