Qwest CEO: RBOC-IXC consolidation almost inevitable

Consolidation of Bell companies and the largest interexchange carriers is a foregone conclusion, according to Qwest CEO Joseph Nacchio.

Speaking at the Salomon Smith Barney Entertainment, Media and Telecommunications Conference in Scottsdale, Nacchio said long distance is not a natural national market and lends itself much better to being provided by large regional players.

“You’re going to end up with three or four big players who make a lot of money,” he said. “Long distance is more of a super-regional business.”

Before that can happen, the Bell companies must win Section 271 approval in all of their markets--something Nacchio believes will happen for Qwest this year. Qwest will file its massive multi-state 271 application in pieces in March and April.

Qwest’s role in the consolidation scenario--as an acquirer or an acquisition--remains uncertain, but Nacchio said his company doesn’t necessarily need to buy any more assets. Late last year, the company acquired GTS in Europe in part for its operating assets but not necessarily for its links, he added.

Regardless of the players, Nacchio said the anticipated consolidation of IXCs and Bells will “make life easier for us,” because those merged companies will begin to look a lot more like Qwest.

Meanwhile, the carrier will continue conserving its cash.

“Our capital expenses are pretty much variable with demand,” Nacchio said. “We might actually under-spend for a while as we get capacity up.”