RIDE THE LIGHT [SERVICE MARK]
QWEST LOGO [REGISTERED TRADEMARK] NEWS
QWEST COMMUNICATIONS RAISES REVENUE, EBITDA
TARGETS FOR 2000 & 2001
Company Focused on Higher Growth, Improved Service
Summary:
o For 2000, Qwest expects to achieve revenue of $18.8 to $19.1 billion,
exceeding the previous projection of $18.5 billion; EBITDA is expected to
be $7.4 billion
o For 2001, Qwest expects to achieve revenue of $21.3 to $21.7 billion,
exceeding the previous projection of $21.0 billion; EBITDA is expected to
be $8.5 to $8.7 billion, exceeding the previous projection of $8.5 billion
o Capital investments of $9.0 billion for 2000 and $9.5 billion for 2001 to
improve service, to double customers for DSL and wireless, to double Web
hosting capacity and to expand data and Internet service
o Raising $1.0 billion in cash through the sale of investments
o Raising $1.75 billion in cash through the previously announced sale of
570,000 access lines
o Launching Qwest Digital Media and naming a cable industry leader as CEO
o Streamlining Qwest by eliminating 11,000 duplicate, non-essential jobs and
initiating a pay-for-performance program for employees
DENVER, September 7, 2000 - Qwest Communications International Inc. (NYSE: Q),
the broadband Internet communications company, today raised its revenue and
EBITDA (earnings before interest, taxes, depreciation and amortization) targets
for 2000 and 2001 as it aggressively implements its merger integration plans.
"Based on the strength of our business and our success in executing our
strategic merger plan, we are raising our 2000 revenue target from $18.5 billion
to a range of $18.8 to $19.1 billion, and reiterating our EBITDA target of $7.4
billion," said Qwest Chairman and CEO Joseph P. Nacchio. "We are also raising
2001 targets for revenue from $21.0 billion to a range of $21.3 to $21.7 billion
and for EBITDA from $8.5 billion to a range of $8.5 to $8.7 billion."
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September 7, 2000
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Nacchio also reaffirmed the five-year compounded annual growth targets of 15-17
percent for revenue and approximately 20 percent for EBITDA. In addition, he
said that Qwest is on track to exceed the estimated synergy targets of more than
$12.0 billion in revenue, generating EBITDA of $4.0 to $4.2 billion, and $4.3 to
$4.5 billion of cost savings through 2005.
Qwest is realigning resources to be more focused on management of its Internet
access and applications, communications services, wireless, DSL and video
product portfolios. Nacchio said that Qwest is taking a series of actions that
include modestly raising capital budgets to $9.0 billion in 2000 and to $9.5
billion in 2001 to: improve service and invest in the core business; double the
Web hosting capacity of its CyberCenters(sm); and double the customer base for
its wireless and digital subscriber line (DSL) businesses. In addition, Nacchio
said Qwest will soon announce the appointment of a Chief Quality Officer to
strengthen processes involved with the delivery and support of services to
businesses and consumers.
Qwest announced that it will generate approximately $1.0 billion in cash through
selling investments in approximately 15 companies - investments that are not
aligned with Qwest's strategic objectives. This includes the sale of a portion
of Global Crossing investment Qwest obtained through the acquisition of U S
WEST.
The company also said that over the next 12 months it plans to complete the
previously announced sale of 570,000 access lines in its 14-state territory,
generating approximately $1.75 billion in cash. When the transaction is
complete, Qwest will continue to own and operate more than 17 million access
lines where it provides local service.
In a related announcement today, the company launched Qwest Digital Media, a
subsidiary providing end-to-end digital multimedia services via broadband
Internet distribution. Qwest Digital Media will set new industry standards for
the storage, management and delivery of digital content, particularly the
convergence of traditional and digital media. Qwest has hired David Woodrow,
former executive vice president of new business development at Cox
Communications Inc., as CEO reporting to Nacchio.
Job Reductions
The company also announced it will eliminate 4,500 jobs by December 31, 2000,
and an additional 6,500 jobs by the end of 2001. Additionally, 1,800 contractor
positions will be eliminated by the end of next year. The job reductions come as
Qwest streamlines its business and employees become more entrepreneurial and
accountable for accomplishing strategic priorities. Most of the cuts will focus
on overlapping staff functions. Nacchio said none of the reductions would impact
the delivery of service to customers and that the company is focusing
significant additional resources on improving service in the markets where it
offers local service.
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September 7, 2000
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"We are successfully blending the businesses and cultures to further Qwest's
position as an entrepreneurial, large-cap growth company," said Nacchio. "We are
relentlessly pursuing growth and uncovering new areas of customer demand, while
maintaining our vision and direction."
Growth Across All Markets
Qwest DSL high-speed Internet service will be available in 72 markets by the end
of 2000. Nacchio said in 2001 Qwest plans to aggressively expand its DSL
availability in the top eight markets in western states as it continues testing
a number of new DSL technologies that will allow for greater access to
businesses and homes with new services. Qwest expects to double its total number
of DSL customers from 250,000, at the end of 2000, to more than 500,000 by the
end of next year.
Nacchio also reported wireless customers are expected to total 800,000 by the
end of 2000, nearly 50,000 more customers than what was projected earlier in
2000. By year-end 2001, Qwest expects to have 1.6 million wireless customers and
will have doubled revenues to about $1 billion.
The company continues to accelerate the build-out and activation of its
CyberCenters(sm) across the U.S. By the end of 2000, Qwest expects to have 14
CyberCenters operational and plans to add an additional 10 CyberCenters by the
end of 2001, which will more than double the capacity ready for use.
Qwest continues to focus on obtaining section 271 approval to re-enter the
long-distance business and expects to have at least one state in its 14-state
territory approved by the FCC by next summer. In addition, the company plans to
file section 271 applications with the FCC for approval to re-enter the
long-distance business in its other states shortly thereafter. To help support
this initiative, Qwest has initiated an innovative, first-of-its-kind, central
collaborative process for Operational System Support testing in its local
service area.
Service Improvements
Nacchio said Qwest has established aggressive internal goals for improving basic
residential service. By the end of 2001, the company expects to reduce held
orders for service to their lowest level in the last four years. Also by the end
of 2001, installation and repair results are expected to improve moving Qwest
into the top quartile of providers in the industry. During this period, Qwest
also expects to become best in class for service repair by the following day.
Qwest said it expects to reduce repeat repair calls by 20 to 30 percent by the
end of 2001. Qwest said it expects to complete repair service within 24 hours
making it best in class by the end of 2001.
Nacchio said all 14 states where Qwest now provides local service are expected
to see a significant improvement in service by the end of 2001. Qwest also plans
to reduce repeat repair calls by 30% by the end of 2001.
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September 7, 2000
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Compensation Now Linked With Qwest Performance
Nacchio said programs to establish an entrepreneurial, customer-focused culture
are being aggressively implemented. Qwest will outline to employees today a new
performance-driven pay and benefits plan designed to ensure that they have a
direct stake in creating value for Qwest shareowners and customers.
"Linking pay to performance will drive greater accountability," said Nacchio.
"When customers are satisfied and our company meets its objectives, then
employees should share in that victory. There are no rewards for second place."
Highlights of the new compensation and benefit program are:
o awarding 200 stock options to all non-bargained for employees effective
September 7, 2000
o creating a company-wide quarterly bonus program where rewards for
non-bargained for employees will be based on meeting company and business
unit goals for revenue and EBITDA growth
o introducing an employee stock purchase plan where employees can purchase
Qwest stock at a 15% discount beginning this month
o implementing changes to the company's pension plan, its medical, dental and
life insurance plan and its 401K plan
In designing this new program, Qwest retained the services of Watson Wyatt &
Company, one of the nation's leading pay and benefits consulting firms, to
survey more than 30 companies likely to compete with Qwest for talent.
While Qwest's bargained for employees will also be able to take advantage of the
employee stock purchase plan, any other changes to bargained for employees'
compensation and benefits programs will be addressed separately during
bargaining sessions in 2001.
Qwest also said that changes in the benefit plans announced today will not
affect the current retirees of the company.
About Qwest
Qwest Communications International Inc. (NYSE: Q) is a leader in reliable,
scalable and secure broadband Internet-based data, voice and image
communications for businesses and consumers. The Qwest Macro Capacity Fiber
Network, designed with the newest optical networking equipment for speed and
efficiency, spans more than 104,000 miles globally. For more information, please
visit the Qwest web site at www.qwest.com.
Contacts: Media Contact: Investor Contact:
Tyler Gronbach Lee Wolfe
(303) 965 0589 800-567-7296
[email protected] [email protected]
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This release may contain forward-looking statements that involve risks and
uncertainties. These statements may differ materially from actual future events
or results. Readers are referred to the documents filed by Qwest and U S WEST,
Inc. with the Securities and Exchange Commission, specifically the most recent
reports which identify important risk factors that could cause actual results to
differ from those contained in the forward-looking statements, including
potential fluctuations in quarterly results, dependence on new product
development, rapid technological and market change, failure to maintain rights
of way, financial risk management and future growth subject to risks, adverse
changes in the regulatory or legislative environment, and failure to achieve the
synergies and financial results expected from the acquisition of U S WEST. This
release may include analysts' estimates and other information prepared by third
parties, for which Qwest assumes no responsibility. Qwest undertakes no
obligation to review or confirm analysts' expectations or estimates or to
release publicly any revisions to any forward-looking statements to reflect
events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
The Qwest logo is a registered trademark of, and CyberCenter is a service mark
of, Qwest Communications International Inc. in the U.S. and certain other
countries.
