As regulators in Washington state and elsewhere consider a proposed merger of Qwest Communications International Inc. and CenturyTel Inc., officials of the two telecom companies say it's too early to say what impacts the marriage could have on Qwest's operations here, but promise little effect on customers.
Monroe, La.-based CenturyTel, which does business as CenturyLink, announced last April its plans to acquire Denver-based Qwest in a stock transaction valued at $10.6 billion. The two companies, which serve a combined 1.5 million phone and data lines in Washington state, say they hope to complete the merger during the first half of next year, and likely will operate under a new, yet to be determined name.
Qwest employs 138 people and operates 15 facilities in the greater Spokane area, says Bob Gravely, a Portland-based spokesman. Gravely says the company doesn't know yet whether any major changes would occur in that employment number or in operations as a result of the merger.
"In general, the service areas that each company serves don't overlap at all," he says. "So the area Qwest currently serves, and where our employees work to provide those services, will both remain in place."
Gravely says that because the two companies provide very similar services, such as telephone lines and broadband service, he expects the transition to appear mostly seamless for both Qwest and CenturyLink's current customers.
"We don't anticipate customers to notice any significant changes to rates initially, and any changes to them would go through the (Washington Utilities and Transportation) Commission anyway," he says.
The Washington Utilities and Transportation Commission (WUTC), which regulates utility services in the state, has yet to approve the merger, though it has said it expects to make a decision on the proposal by March.
The merger, says CenturyLink spokeswoman Annmarie Sartor, would benefit customers through greater financial flexibility and expanded service capabilities. "Essentially, combining the two companies will make them a larger leading company in the communications industry," she says.
Shareholders of both companies already have approved the merger, as have regulators in 11 of the states, and the District of Columbia, in which they operate, she says. Nine other states still are mulling the proposed merger, as is the Federal Communications Commission.
Qwest serves customers in 14 Midwestern and Western states, and is the largest local phone service provider in Washington, serving about 1.3 million telephone lines here, it says. Most of that service is focused in metropolitan areas, including Spokane, Seattle, the Tri-Cities, and Yakima. It also serves about 330,000 lines in Idaho.
CenturyLink was formed through the merger of CenturyTel and Embarq last year, and is the fourth-largest phone company in the U.S., serving 33 states. In Washington state, it's the third largest provider, with 197,000 phone lines, mostly in smaller cities such as Cheney, Ritzville, and Sprague.
If the merger is approved, the combined company would serve about 17 million phone lines, 5 million broadband customers, and 850,000 wireless customers in 37 states.
Sartor says one of the combined company's plans would be to adopt a local market operation model in the areas it would serve. "That puts the decision making as close to the customers as we can," she says. "The local management will live in the area they serve and will be the drivers of major decisions in those areas so we can serve the customers to the best of our ability."
She adds that CenturyLink's roots are in serving rural areas, adding, "We understand that rural markets need those services to compete in the global marketplace. It's very important."
WUTC staff recommended that the merger be approved dependent on both Qwest and CenturyLink agreeing to 45 separate conditions the staff outlined.
Bill Weinman, assistant director of telecommunications for the WUTC says, "The most important (stipulation) that we're recommending is that certain financial conditions be in place for the three-year period following the close of the transaction. We're asking that there be a freeze on rates for residential and business services during that period."
Weinman adds, however, that both companies have expressed disagreement on the freezing of rates.
WUTC staff also has recommended that the companies commit to extending broadband services throughout Washington state, including to currently unserved and underserved areas.
"We're asking that they increase the amount of those services in general across the state," he says.
Among their other recommendations, the WUTC staff says any costs associated with integrating and rebranding the two companies be borne by their shareholders, rather than be passed along to customers in the form of increased rates, and that the company would report back on a regular basis to the commission on any savings that came from the transaction.
Weinman says Qwest and CenturyLink recently issued a rebuttal to the staff's 45 recommendations, and says the WUTC was to respond to those claims by Nov. 15.
A final hearing on the proposed merger is scheduled for January, at which he says the commission will listen to cross-examinations of all the involved parties and, some time afterward, the commission will issue its final order.
"We don't have any idea where the commissioners will sit on this until we receive their order," he says, adding that the commissioners can't communicate with the involved companies or any WUTC staff members that are providing recommendations on the merger.
Currently, Qwest and CenturyLink are researching and evaluating changes to the companies' branding and marketing methods, including possible name and logo changes that would be launched after the merger is complete, Sartor says.
"We're not sure what the name will be," she says. "Rebranding is an extensive process for the company, so once the decision is made, customers won't see any immediate changes. It will take months and months to ultimately make all those changes."
CenturyLink provides local and long-distance phone service and broadband Internet service, and is an agent for DirecTV satellite service. It also offers Internet-based video services, which are an alternative to cable and satellite TV, in five markets, she says. The company serves both residential and commercial customers, she says.
Qwest provides local phone service and broadband to both residential and commercial customers, and also offers services from DirecTV and Verizon Wireless.
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