Qwest CEO Sees 2008 Capex $1.8 Billion on Network Upgrade
NEW YORK -(Dow Jones)- Qwest Communications International expects $1.8 billion in capital spending next year, according to Chairman and Chief Executive Edward Mueller.
One of the priorities for the Denver telecommunications company is to upgrade its network. Roughly 23% of its neighborhoods feature fiber-optic lines connected to a central hub, which increases the connection speed available to consumers. Mueller said he sees a penetration rate of 40% by 2011, and expects a payback from its fiber investment in five years based on a "modest" increase of $10 in average revenue per user.
Qwest will cover a footprint of 1.5 million homes with the network upgrade at a cost of $175 a home. The company will deploy the faster connections to select areas within 20 markets, Mueller said. Qwest will evaluate the success of the project after it is completed next year.
"We will finish it in 2008 and decide where we want to be with it," Mueller said. "The business case is super conservative."
Despite the investment, Mueller said he sees no plans for an Internet TV service similar to what AT&T Inc. (T) is investing in. He did say he supported an on-demand model of video delivery.
Mueller said he would also look to strengthen existing partnerships and form new ones. Qwest has deals with DirecTV Group Inc. (DTV) for satellite TV and Sprint Nextel Corp. (S) for wireless service.
Mueller declined to comment on any potential merger and acquisition deals.
Qwest will provide a forecast for 2008 after it announces its fourth-quarter results, Mueller added.
-By Roger Cheng, Dow Jones Newswires; 201-938-2020; roger.cheng@dowjones.com
(END) Dow Jones Newswires
Posted to the site on 17th December 2007