Qwest Signals Pursuit of Assets

A day after quitting the bidding for MCI Inc. in frustration, Qwest Communications International Inc. signaled it might pursue other deals to contend with the merger-driven consolidation of power in the telephone industry.

Chief Executive Dick Notebaert, speaking after Qwest reported a first-quarter profit on a one-time gain, said Tuesday that the industry would look for ways to create “a meaningful third leg” to compete with the two giants being formed by the acquisition of AT&T; Corp. by SBC Communications Inc. and of MCI by Verizon Communications Inc.

“There are a number of opportunities in our sector, a number of companies, a number of businesses,” Notebaert said in a conference call after Tuesday’s report.

Analysts suggested that Qwest might target companies that sell services to businesses, or possibly assets that Verizon and SBC could be forced to unload to lessen government worries that the mergers would hurt competition.

Verizon beat Qwest for MCI on Monday with an $8.5-billion deal that was 13% below the $9.75 billion offered by Qwest. It was the fourth time MCI’s board rejected a higher bid from Qwest, whose overtures were mostly treated as a bargaining chip with which to extract more money from Verizon.

“We never felt like we were negotiating with MCI,” said Notebaert. “Everything we did was unsolicited. At every turn it was, in my opinion, my personal opinion, unsolicited and not warmly received.”

Notebaert’s comments came as Qwest reported that it swung to a first-quarter profit of $57 million, or 3 cents a share. In the same period last year, Qwest lost $310 million, or 17 cents a share.

Qwest, which provides local phone service in 14 mostly Western states, attributed the profitable turn to the sale of its wireless assets to Verizon, which boosted its bottom line by 14 cents a share. Qwest now sells cellular service carried by Sprint Corp.’s network.

Qwest shares fell 1 cent to $3.46 on the New York Stock Exchange.