Qwest sale rumors resurface

Potential buyer announces that it is not interested in a deal

An apparent confirmation that Networx vendor Qwest Communications Inc. is trying to sell its long-haul fiber network has again whipped up a frenzy of speculation on Wall Street.

At an investor’s conference in Boston last week, Cogent Communications Inc. CEO Dave Schaeffer said that Cogent had withdrawn as a bidder on the asset. “We did take a quick look at those assets,” Schaeffer said. But the voice business it supports, he said, has “little or no EBITA and is in fact cash-flow negative.

“The combination of [Qwest] management’s expectation of valuation with that negative cash flow quickly led us to believe that we would not be an active bidder on that asset,” Schaeffer said.

Washington-based Cogent is a multinational Internet service provider and is ranked among the top five IP networks globally.

Rumors of the possible sale of the asset for between $2 billion and $3 billion have rumbled through the market since April. Those rumors were dampened after Qwest was able to refinance its debt.

And earlier this week, J.P. Morgan upgraded Qwest stock from $4.02 to $4.31.

Analysts suggest that the Qwest asset won’t draw bids of more than $2 billion.

Qwest is ranked No. 55 on the 2009 Washington Technology Top 100 list of the largest government contractors.

About the Author

Sami Lais is a special contributor to Washington Technology.

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