DENVER, May 15 -- Qwest Communications International Inc. today said that its customers and revenues should not be affected by the deteriorating financial condition of KPNQwest N.V. KPNQwest announced earlier today that it continues to explore various options, including obtaining financing from its shareholders, strategic buyers and other persons.
Qwest Chairman and CEO Joseph P. Nacchio said, "We will be working closely with KPNQwest to ensure that our customers continue to receive the highest level of global services as an extension to Europe of our service commitment to our customers."
Qwest said that it expects no interruption in service to customers using the KPNQwest network in Europe. Qwest also said that it currently receives approximately $3 million in monthly retail and wholesale revenues from its customers using the KPNQwest network.
Qwest said it will not make additional investments in KPNQwest unless it makes sense for Qwest shareowners. Qwest believes it has no other obligation to fund KPNQwest.
Qwest wrote down the carrying value of its investment in KPNQwest to approximately $706 million at March 31, 2002, which reflects the market value of $3.30 per share of KPNQwest stock at that date. Qwest currently owns approximately 214 million shares of KPNQwest's common stock. Subsequent to March 31, 2002, the stock price of KPNQwest's common stock declined below its current carrying value. In its announcement today KPNQwest said that there is significant risk that there may be no underlying value to either its debt or equity securities.
In accordance with the company's policy to review the carrying value of marketable equity securities on a quarterly basis for other than temporary declines in value, at the end of the second quarter of 2002 Qwest will again assess the factors it uses to determine fair value of the KPNQwest common stock, including the financial condition and prospects of KPNQwest and the European telecommunications industry, the severity of the decline of the stock price and the near term potential for stock price recovery, in determining the timing and amount of a further write-down, which Qwest believes is likely and will be significant.
Qwest Communications International Inc. (NYSE: Q - News) is a leader in reliable, scalable and secure broadband 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 190,000 miles globally. For more information, please visit the Qwest Web site at www.qwest.com .
This release may contain projections and other forward-looking statements that involve assumptions, risks and uncertainties. Readers are cautioned not to place undue reliance on these statements, which speak only as of the date of this release. These statements may differ materially from actual future events or results. Readers are referred to the documents filed by Qwest Communications International Inc. (together with its affiliates, "Qwest", "we" or "us") with the Securities and Exchange Commission (the "SEC"), 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 but not limited to: the duration and extent of the current economic downturn in our 14-state local service area, including its effect on our customers and suppliers; any adverse outcome of the SEC's current inquiries into Qwest's accounting policies, practices and procedures; adverse results of increased review and scrutiny by regulatory authorities, media and others (including any internal analyses) of financial reporting issues and practices or otherwise; rapid and significant changes in technology and markets; failure to achieve the projected synergies and financial results expected to result from the acquisition of U S WEST, and difficulties in combining the operations of the combined company; our future ability to provide interLATA services within our 14-state local service area; potential fluctuations in quarterly results; volatility of Qwest's stock price; intense competition in the markets in which we compete; changes in demand for our products and services; adverse economic conditions in the markets served by us or by companies in which we have substantial investments; dependence on new product development and acceleration of the deployment of advanced new services, such as broadband data, wireless and video services, which could require substantial expenditure of financial and other resources in excess of contemplated levels; higher than anticipated employee levels, capital expenditures and operating expenses; adverse changes in the regulatory or legislative environment affecting our business; adverse developments in commercial disputes or legal proceedings; and changes in the outcome of future events from the assumed outcome included by Qwest in its significant accounting policies. The information contained in this release is a statement of Qwest's present intention, belief or expectation and is based upon, among other things, the existing regulatory environment, industry conditions, market conditions and prices, the economy in general and Qwest's assumptions. Qwest may change its intention, belief or expectation, at any time and without notice, based upon any changes in such factors, in Qwest's assumptions or otherwise. The cautionary statements contained or referred to in this release should be considered in connection with any subsequent written or oral forward looking statements that Qwest or persons acting on its behalf may issue. 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.The Qwest logo is a registered trademark of, and CyberCenter is a service mark of, Qwest Communications International Inc. in the U.S. and certain other countries.
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