Telecom Ramblings

In a bid to cut costs, Qwest Communications [NYSE:Q - chart, news, filings] announced today that it will freeze salaries and suspend future pension benefit accruals for active management employees for 2010.  Combined with a few other changes to its benefit plans, the company hopes to save $100M over the full year.  The new plan goes into effect with with the new year, but at least they didn’t wait until everyone had finished their Christmas shopping already.  The plan does not affect retirees, former employees and employees covered by collective bargaining agreements with CWA and IBEW.  However, you can call me a cynic if you like, but when management takes its lumps first then perhaps the rank and file had best keep a wary eye out for the man with the axe around the corner.  

Qwest isn’t facing any immediate hits, just a long term downward trend in wireline connections and no consumer wireless business with which to make up the ground.  At the same time, following their decision not to sell the longhaul business over the summer there doesn’t seem to be much chance of M&A activity that would substantially change the landscape anytime soon.  In other words, they’re going to be hunting for cost savings every quarter for the balance of the foreseeable future.