Qwest Communications Reports Strong Fourth Quarter and Year-End 1998 Results


  • 319 percent increase in total revenue -- $865.1 million
  • Internet and data services revenue grew in excess of 600 percent
  • EBITDA increased 386 percent to $148.3 million
  • Sequential communications services revenue growth of 11.3 percent

DENVER, February 3, 1999 -- Qwest Communications International Inc. today reported strong fourth quarter and year-end 1998 results underscoring its successful internal growth and acquisition strategy.

In the fourth quarter total revenue increased more than 300 percent to $865.1 million compared to the fourth quarter of 1997. Communications services revenue grew to $670.1 million, representing a seventeen-fold increase from the fourth quarter of 1997. Internet and data services revenue growth was in excess of 600 percent, underscoring Qwest?s leadership in the convergence of Internet-based multimedia communications. Earnings before interest, taxes, depreciation and amortization (EBITDA) were up nearly four-fold to $148.3 million over the same period in 1997.

Qwest exceeded the consensus of analysts? estimates. The company reported earnings of $0.03 per share, before one-time charges, for planned merger costs and the announced redemption of a portion of the company?s debt. Including these one-time costs, the company reported a net loss of ($0.06) per share.

On a pro forma basis, total revenue of $865.1 million grew 26 percent while EBITDA of $148.3 million increased 55 percent over the fourth quarter of 1997. Communications services revenue on a pro forma basis grew 30 percent over the fourth quarter of 1997, significantly exceeding industry growth rates.

"We are pleased with another quarter of strong financial performance while we continue to invest in growing our business on a global basis," said Joseph P. Nacchio, Qwest president and CEO. "Through the acquisitions and partnerships we completed in 1998, we successfully transitioned Qwest from building a state-of-the art network into a leading, Internet protocol-based multimedia company focused on the convergence of data, video and voice services."

Building on double-digit growth from the third quarter of 1998, the company once again posted sequential growth of communications services revenue of more than 11 percent. Communications services EBITDA increased nearly 50 percent from the third quarter of 1998. As a percent of communications services revenue, communications services EBITDA grew from 8.6 percent to 11.4 percent during the fourth quarter -- reflecting continued improvement in gross margins and selling, general and administrative costs. Recurring earnings improved from a loss of ($0.02) per share in the third quarter to earnings per share of $0.03 before one-time charges.

"In 1998 we were focused on growing our base of customers, revenue and network assets. During the year we achieved a number of significant financial and strategic milestones that helped establish momentum in our effort to promote wide-spread use of Internet and web-based communications services," said Robert S. Woodruff, Qwest executive vice president and chief financial officer.

For the full year, Qwest recorded $2.24 billion in total revenue, EBITDA of $294.5 million and a net loss per share of ($3.02). On a pro forma basis, the company had total revenue of $3.02 billion, EBITDA of $416.7 million and a net loss of ($0.08) per share before one-time costs.

Internet and Data Communications Growth

On a pro forma basis, Internet and data revenue increased over 60 percent from the same quarter of the previous year, while sequential data revenue was up approximately 20 percent from the third quarter of 1998. The growth in data services was led by gains in ATM and frame relay revenues, which increased more than 200 percent from the fourth quarter of 1997.

During the quarter Qwest took additional steps to further strengthen its leadership in the domestic and international broadband services marketplace by:

  • striking a strategic relationship with Microsoft Corp. to offer complex web hosting, managed software services and virtual private networking,
  • forming an international joint venture with the Dutch communications company KPN to build and operate a high capacity European Internetwork, and
  • completing the acquisition of Icon CMT Corp., a leading web integration tier-one provider of high-value enterprise, end-to-end Internet solutions for large businesses.

Earlier today, Qwest announced it has been awarded a subcontract by TRW Inc. to provide advanced communications services to the U.S. Department of Treasury. Qwest will help support the multi-year $1 billion Treasury Communications System, a network that interconnects Treasury and all of its agencies throughout the U.S., Canada and Mexico.

Construction of the Qwest Network

Qwest continues to make significant progress and has completed construction on 12,500 miles of its U.S. fiber optic network and is on track to complete the entire 18,500 miles, linking more than 130 cities by midyear. In addition, 17,000 miles of conduit and 15,000 miles of cable have been installed around the country. During the fourth quarter of 1998, construction revenue declined slightly from the previous quarter to $195.0 million reflecting progress in completing the network build out and the seasonal nature of construction.

About Qwest

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. Headquartered in Denver, Qwest has more than 8,000 employees and 80 sales offices in North America, Europe and Mexico. The Qwest Macro Capacity (SM) Fiber Network, designed with the newest optical networking, will span more than 18,500 route miles in the United States when it is completed in mid-1999. In addition, Qwest and KPN, the Dutch telecommunications company, are forming a venture to build and operate a high-capacity European fiber optic, Internet Protocol-based network that has 2,100 miles and will span 9,100 miles when it is completed in 2001. Qwest also has nearly completed a 1,400-mile network in Mexico. Further information is available at http://www.qwest.com.

See Attachments about Qwest Communications International and Subsidiaries

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 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 potential fluctuations in quarterly results, dependence on new product development, rapid technological and market change, failure to complete the network on schedule and on budget, financial risk management and future growth subject to risks, Qwest?s ability to achieve Year 2000 compliance, adverse changes in the regulatory or legislative environment, and satisfactory negotiation and execution of definitive bligation 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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Contact Information

Qwest Media Contact

Tyler Gronbach

(303) 992-2155

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