Qwest signals desire for a stronger mobile product
Qwest Communications said it is looking for a mobile networking partner that will allow it to fully integrate cellular telephony into its bundles and help it offer richer wireless broadband services.
To date, Qwest has been buying minutes from Sprint and reselling them with private-labeled handsets. The current contract with Sprint runs to 2009.
Qwest, which has more than 800,000 cellular customers, derives minimal income from the arrangement.
Furthermore, the nature of the deal constrains Qwest to a less-competitive position versus other cellular companies; Qwest can offer only those services also offered by Sprint, and usually only after Sprint rolls them out, for its own customers. Qwest also ends up lagging in the market when it comes to the introduction of new handsets.
Qwest has no wireless assets of its own. As it was digging itself out of a financial hole several years ago, the company was compelled to sell off all of its spectrum licenses and wireless infrastructure (Verizon was the buyer).
Qwest CEO Edward Mueller said that Qwest will consider an arrangement with any company, including current partner Sprint.
The announcement may be a negotiating ploy, as Sprint’s practical options are limited. Few other cellular companies, including T-Mobile, Alltel, Cricket (Leap), etc., have anywhere near the coverage of Sprint. There is still minimal infrastructure to support a Wi-Fi or WiMAX-based service.
On a separate issue, Qwest said it will use cash to pay down debt and buy back shares.
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