Qwest needs to grow to compete
Comparing the size of Qwest with a combined MCI WorldCom-Sprint or even AT&T, chief executive Joe Nacchio says his company ultimately will have to grow to effectively compete in the rapidly changing telecommunications market.
Comparing the size of Qwest with a combined MCI WorldCom-Sprint or even AT&T, chief executive Joe Nacchio said that his company ultimately will have to grow to effectively compete in the rapidly changing telecommunications market. His comments come as some analysts speculate that BellSouth could possibly make a bid for Qwest.
"Do I think Qwest-US West is large enough? With Sprint and MCI WorldCom at a $170 billion market cap? Clearly not," Nacchio said. "It would be foolish of me to say we're big enough."
Qwest's planned merger with US West--scheduled for a shareholder vote on November 2--will give the long-haul fiber-optic communications company a local presence, billions of dollars in annual revenue, and access to US West's high-speed Internet access technology. But recent megamergers have put new pressure on industry players to find other partners before federal regulators decide such pairings are hurting competition.
Following BellSouth's failed bid for Sprint last week, the industry is watching closely to see what the Bell's next move might be. Many analysts point to Qwest as a logical acquisition target, since BellSouth already holds a 10 percent stake in the quickly growing firm. Global Crossing, which recently completed its own acquisition of Frontier Communications, has also been rumored to be a BellSouth target.
Nacchio said he talked to BellSouth executives this week, regarding the companies' joint operating agreement. Yet he said he's not legally privy to any merger bids before they happen, since he's under contract with US West.
"I'll be the last to know. But the next four weeks could be interesting," he said, referring to the upcoming shareholder vote.
But despite the speculation that BellSouth--or even Deutsche Telekom, which is looking to expand overseas--could bid for his company, Nacchio said he was committed to finishing the US West deal.
"We've got to digest that," he said.
And MCI WorldCom is a long way from completing the Sprint merger, which has been sharply criticized by federal regulators, he noted. "We've got time to assess [their merger]," he added.