Qwest’s third quarter earnings boosted by tax benefit
Qwest Communications International reported today that its third-quarter net income was bumped up thanks to a $2.15 billion tax benefit. On the other side of the ledger, Qwest’s overall revenue was down in large part because of a 19 percent drop in traditional wholesale services.
Qwest reported a third quarter profit of $2.1 billion, or $1.08 per share, which included the $2.15 billion income tax benefit and $353 million in charges related to the settlement of a litigation case with shareholders. Over the same time frame last year, Qwest reported a profit of $194 million, or 9 cents a share.
Qwest posted a 9.7 percent increase in its Internet and video service revenue. Qwest's Price for Life on broadband service, as well as the availability of discounts on a variety of bundle combinations, helped to increase bundle penetration to 61 percent in the quarter, compared to 56 percent a year ago.
Qwest’s broadband customers increased by 111,000 in the third quarter while it added 62,000 video customers through its partnership with DirecTV. With Qwest’s own ChoiceTV customers and the DirecTV partnership, Qwest has a total of 634,000 video subscribers compared to 350,000 a year ago.
Despite the increase in Internet and video subscribers, Qwest’s revenues were offset by an 8 percent drop in traditional long-distance and local telephone services.
While Verizon and AT&T have sunk billions into providing video services to their subscribers, Qwest has been slow to upgrade its networks for video. Qwest’s board announced it has authorized spending up to $300 million in support of faster broadband speeds connecting its network to customers’ homes.