The Telegraph
Since 1st March, 1999
Email This PagePrint This Page
Qwest to restate $ 950 m in sales
- Deals on exchange of optical capacity under cloud

Denver, Sept. 23 (Reuters): Qwest Communications International Inc, a local US telephone company facing federal probes of its accounting practices, said on Sunday it expected to restate $ 950 million in revenues and costs for swaps of optical-network capacity.

The transactions in question include the exchange of optical capacity with other carriers, it said.

The Denver-based company said it might also restate up to $ 531 million in sales of optical capacity for cash. The magnitude of the adjustments and the periods affected have not yet been determined.

The US House Energy and Commerce Committee will hold a series of hearings starting on Tuesday to examine deals among Qwest, Global Crossing Ltd, FLAG Telecom and Cable & Wireless

In July, Qwest, the dominant local telephone company in 14 states from Minnesota to Washington, said it would restate its results because it improperly booked $ 1.16 billion in sales and other items in 1999 to 2001.

Some of the problems disclosed on Sunday were included in that original announcement. Qwest said its total potential restatement now stands at about $ 1.48 billion since it plans to restate only the results since its June 2000, acquisition of local telephone company US West.

In the year-and-a-half before the merger, Qwest said it recognised $ 1.32 billion in sales from capacity swaps.

The company said it continued to cooperate with an investigation by the Securities and Exchange Commission and Department of Justice.

Qwest said it was “optimistic” that Sunday’s disclosure of additional restatements offers a “first step toward a possible resolution” of its discussions with the SEC.

The company told analysts in a meeting last week it was in “critical stages” of discussions with federal investigators.

Qwest said it continued to analyse, along with its new auditor, KPMG, other accounting practices and transactions, but said it could not predict when a restatement would be completed. It said its historical financial statements in 2000, 2001 and the first three months of 2002 should not be relied upon.

The company also plans to take charges in the third quarter to write down the value of its telephone network, fibre-optic network and inventory.

Regulators are investigating whether Qwest and other carriers improperly inflated revenues by incorrectly booking sales of network capacity in one lump sum, rather than spreading out the sales over the lifetime of a contract.

Email This PagePrint This Page