How many times can one company reinvent itself?
Five years ago, Qwest Communications International was a struggling spin-off of Southern Pacific Telecom. Then CEO Joseph P. Nacchio arrived to transform the fledgling company into a broadband powerhouse. With its 1998 purchase of LCI International, Qwest instantly became the No. 4 long-distance carrier. Two years ago, Qwest pulled another stunner by launching a hostile takeover of the Bell up the street — U S West. Analysts predicted that Qwests days as a growth company were over.
Not so, says Steve Jacobsen, former executive vice president for business markets, who recently left after four years with the company. “The best thing we ever did was buying U S West,” he says.
Qwest, Jacobsen says, has maintained value by focusing on enterprise business customers, expanding its Internet Protocol and data offerings, and making the most of its fiber networks, while bolstering its financials with U S West cash flow and customers. “Our value proposition hasnt changed,” he says. “We have the full set of services. We have the biggest, baddest network in the business, and we also have a local-access business with 18 million customers.”
Chief among Qwests areas of focus: Regaining the long-distance revenue it divested to gain merger approval. One analyst estimates Qwest can pick up $1.6 billion in revenue by converting 20 percent to 40 percent of its local customers to a long-distance offering.
The new bosses pushed hard to improve U S Wests dismal service record, settled $120 million in customer class action suits and dropped another 39 lawsuits against state regulators. According to Jacobsen, Qwest began multistate operations support system testing in mid-April, and “were on a good trajectory” to receive long-distance 271 approval — the Federal Communications Commissions permission, allowing the company to offer the service — in at least one large state by the end of 2001.