Qwest's CEO Edward Mueller said on Monday that he expects more consolidation and that he is open to participating in it. Of course, this begs the question: just what is Qwest's strategy here? For years now it has been plain that their current path cannot be sustained. They still have many options, but once you choose one road others probably are closed off.
- Seek more metro assets and revenue to make its longhaul network more viable, e.g. buy XO. This has seemed like a no-brainer for years, Qwest even bid on the Allegiance assets that are now part of XO. XO's east coast metro fiber would help their ability to compete on a national scale far more than those of OnFiber have (they bought that a couple years ago).
- Seek a larger base of similar customers, e.g. buy Embarq. Seems a bit boring and dead-end-ish, but presumably there is some safety in size and it might be accretive .
- Seek a more international footprint, e.g. buy Global Crossing. This could dovetail with the rumor on VoIPWatch because while I doubt Qwest has the firepower to do it alone, someone who does have that firepower might make it happen. Of course, they might also have to be crazy as a loon, but stranger things have happened.
- Seek a wireless aspect: look to get bought by someone who has one. It's hard to find one that hasn't already effectively said no already though.
- Break itself up and sell the pieces, e.g. sell the longhaul network to LVLT (this has long been a dream of LVLT partisans) and break the ILEC portion into pieces for maximum value.
So can they find something to do this time that is accretive to shareholders? I mean something bigger than OnFiber, which really wasn't enough to make a dent at all. If one doesn't count Icahn as a factor, the obvious first move is to buy XO, but since having Big Carl as a substantial minority shareholder strikes me as something Mueller might see as too much fun, they'd have to find the cash. If they did, they'd also get NextLink and have the cashflow to use that LMDS spectrum just as the wireless sector starts to have need o it, which would give them more leverage to find a wireless partner of some sort.
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