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.