Qwest posts second profitable quarter

Qwest posted its second quarterly profit on strong cost control and broadband growth, despite a slight sequential decline in revenues. The company earned $117 million, or 6 cents per share, on revenues of $3.472 billion.

Qwest is now considering how to reward its shareholders, Chairman and CEO Richard Notebaert told financial analysts on the quarterly earnings call this morning. Possible action could include a share buyback or dividend payment.

Notebaert focused analysts’ attention on the company’s continued commitment to cost control, even as it improves its broadband penetration and the quality of its customer service.

“We have been able to improve our customer service levels to record levels while reducing headcount by attrition,” he told analysts, noting a movement from fifth to third in the J.D. Power & Associates customer satisfaction rating. “We are still on a mission to be number one in customer service--ultimately that is how we will differentiate our value proposition.”

Eighty percent of households in Qwest’s local service territory can now et broadband and of that number, 90% can get service at 1.5 Mb/s or more; half can get 3 Mb/s or more and one-quarter can get 7 Mb/s, Notebaert said.

“I believe our strategies are working--our progress is demonstrable if you plot over a period of quarters the direction we are going,” he said. “That causes us to have a positive outlook for the future.”

Total customer connections increased by 318,000 in the quarter, including small business and consumer voice and data lines, wireless subscriptions, high-speed Internet access and video, the company said. Access lines declined 4.4% due to competition including wireless substitution. Bundle sales remain strong, reaching 54% penetration up from 48% a year ago.