Qwest sale rumors resurface
Qwest Communications long-haul fiber network may or may not be for sale as Cogent Communications announces that it has withdrawn as a bidder.
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At an investor’s conference in Boston last week, Cogent Communications Inc. CEO Dave Schaeffer said that Cogent had withdrawn as a bidder on the asset.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.