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FCC Approves Qwest-US West Merger Under Conditional Approval

Strategic Insights

— 1 min read

The Federal Communications Commission (FCC) has conditionally approved the merger of Qwest Communications Inc. and US West, following the withdrawal of Deutsche Telekom AG from talks about a possible three-way merger. The FCC's conditional approval requires Qwest to fully divest itself of long distance customers in US West's 14-state region before the merger is closed. Qwest chief Joseph Nacchio has expressed his intention to fulfill the company's obligation to complete the merger, while US West has declined to comment.

Key Takeaways:

  • The FCC has conditionally approved the merger of Qwest Communications Inc. and US West, subject to Qwest fully divesting itself of long distance customers in US West's 14-state region.
  • The conditional approval was granted on the day after Deutsche Telekom AG withdrew from talks about a possible three-way merger.
  • Qwest chief Joseph Nacchio has praised the FCC's decision, while expressing his skepticism about US West's decision to consider alternative transactions.
  • US West has declined to comment on the merger, with a spokesman suggesting that the company is making significant progress towards completion.
  • Commissioner Harold Furchtgott-Rothas has expressed reservations about the FCC's conditional approval, questioning the commission's wide-ranging analysis of the merger's public interest implications.
  • Shares of Qwest and US West stock have fallen significantly since the news of Deutsche Telekom's withdrawal from merger talks was announced.
  • US West had considered alternative transactions, but ultimately decided to proceed with the Qwest merger.

Statistics:

  • Qwest's shares closed down $7.37 (a loss of 12.29 percent) on the day of the announcement.
  • US West's shares dropped $6.12 (an 8.01 percent loss) on the same day.
  • The FCC has required Qwest to divest itself of long-distance customers in 14 US states before the merger can be completed.
  • The merger is subject to conditions, including the divestiture of long-distance customers and the company's ability to open its local market to competition.
  • Deutsche Telekom AG has withdrawn from talks about a possible three-way merger with Qwest and US West.

Sources:

  • "FCC Approves Qwest-US West Merger Conditionally" by Newsbytes.com, http://www.newsbytes.com (20000310/WIRES TELECOM, ONLINE, BUSINESS/).
  • Statement by FCC Chairman William Kennard
  • Statement by Qwest chief Joseph Nacchio
  • Statement by US West spokesman Phil Burgess
  • Opinion by Commissioner Harold Furchtgott-Rothas
  • Report by telecom analyst Jeff Kagan.

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