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Qwest meets estimates, sees strong growth ahead

Qwest Communications International Inc. met Wall Street estimates Tuesday with a fourth quarter operating profit of $29.4 million, or 4 cents a share, on sales of $1.16 billion. Qwest reported a profit of a penny a share in the year-ago quarter.

Telecommunications giant Qwest (NYSE: Q), which is about to buy U S West Inc. (NYSE: USW), said fourth quarter revenue jumped 34 percent on the strength of data and Internet services. Communications services revenue increased 73 percent, while Internet and data revenues grew more than 200 percent and comprised more than 25 percent of total revenue.

Compared to the third quarter, fourth quarter sales were up 14 percent.

For the year, Qwest reported sales of $3.93 billion, up 75 percent from $2.24 billion a year ago.

Qwest had a few one-time gains in the quarter. Including one-time items, Qwest reported earnings of $437 million, or 56 cents a share, compared with a loss of $21.6 million, or 3 cents a share, a year earlier.

Qwest reported a gain of $414 million gain from the KPNQwest (Nasdaq: KQIP) initial public offering and a charge of $6.5 million related to its pending merger with U S West. Qwest owns 44 percent of KPNQwest, which is currently valued at about $12.5 billion.

Earnings before interest, taxes, depreciation and amortization (EBITDA) gained 53 percent to $226.4 million.

The outlook was promising. In a statement, Qwest CFO Robert S. Woodruff said he expects revenue growth of 30 to 35 percent in 2000, with EBITDA growth of 40 to 50 percent. Woodruff said capital spending in 2000 will be about $2.5 billion to $2.7 billion.

The estimates don't include the pending merger with U S West, which reported results last week. U S West's revenue growth was weaker than Qwest so expectations could change. Qwest acquisition of U S West would combine U S West's local, wireless and data operations with Qwest's long-distance and high-speed fiber optic communications network.

Qwest said it is ahead of schedule in combining the companies. The deal should close by mid-2000.