NEW YORK-The March 16 announcement that Qwest International Inc. will sell some of its properties to The Montana Power Co. complies with a major condition for final Federal Communications Commission approval of the Qwest-U S West Inc. merger.
Touch America, the telecommunications subsidiary of Montana Power, has agreed to pay $200 million for the long-distance and related wholesale and private-line businesses that Qwest owns in U S West’s 14-state territory.
Established in 1983, Touch America, headquartered in Butte, Mont., provides long-distance, private-line and wireless telecommunications services. It also offers design, installation and maintenance of customer premise phone systems and construction management for fiber-optic networks.
Qwest’s divestiture is required by federal law, which prohibits regional Bell operating companies like U S West, or their affiliates, from providing long-distance services in their local telephone service region.
The sale to Montana Power will be completed with the closure of the Qwest-U S West merger. Solomon Trujillo, chairman, president and chief executive officer of U S West, said he expects the deal to close by summer.
“We have an airtight agreement with Qwest, and that’s the end of the story,” Trujillo said March 15 at the Merrill Lynch & Co. Inc. “Global Telecom Investor Conference” held here.
“Whatever happens, I will make sure Qwest lives up to it. We will hold Qwest accountable for anything that gets in the way.”
Only a week earlier, Deutsche Telekom officially ended its negotiations to buy Qwest, a broadband Internet communications carrier, and U S West, a Baby Bell with wireless properties. Neither Qwest nor DT identified Germany’s largest carrier as the potential suitor. However, their two-way negotiations surfaced after U S West demanded Qwest reveal any such discussions it was holding with a third party.
“The combination of our two companies (U S West and Qwest) was and still is a good idea because we can deliver enormous capabilities to our customers and value to our shareholders,” Trujillo said.
“The reason I pushed for a vertical merger with Qwest is that we will have bandwidth from the street corner to around the world, providing a local touch with global reach.”
On its own, U S West has delivered a 157 percent return on investment to its shareholders during the past three years.
“Our growth has come in areas where customers have a lot of choices. We ended fiscal 1999 with 465,000 [personal communications services] customers, a 150 percent gain from 1998. By the end of this (fiscal) year, we expect to have 750,000,” he said.
Coming “soon,” Trujillo added, will be a “new wireless offering for data access.”
“Revenue growth for the wireless Internet is estimated at $25 billion during the next five years, and we’ll be right in the center of it.”
However, the chief executive said any new services must first pass “Sol’s 30-second rule,” which states, “If this takes more than 30 seconds to learn, it will never be a mass market product.”
The guiding concept of “simplicity as absolutely key to winning customers” also is at work in U S West’s longer-range bundling plans. These envision “equal user interface and experience over whatever device of choice, all integrated onto a single platform,” Trujillo said.
Already, U S West sells a bundled offering of wireless and Internet access for $80 per month. In its Phoenix market, U S West has 20,000 customers enrolled in an experimental multi-service platform. This includes wireline, wireless, data and very-high-data-rate Digital Subscriber Line, which is like cable television.
“It’s a one-stop shop with one bill for integrated services. It’s the most exciting thing I’ve seen in my 26 years in the business. Customer satisfaction is the highest I’ve ever seen,” Trujillo said.
