Qwest to restate up the $1.48B in swap revenue

Qwest Communications on Sunday announced it would restate as much as $1.48 billion in optical revenues generated from capacity swaps and sales over the past two years.

The announcement came two days before Congress holds hearings on capacity swaps between Qwest, Global Crossing, FLAG Telecom and Cable & Wireless. The SEC ruled last month that capacity swaps cannot count toward revenue and that Qwest and other carriers acted improperly in booking swap revenue.

Qwest said it would restate $950 million in revenue from the swaps and an additional $531 million in optical capacity sales. Qwest recorded the sales in 2000 and 2001 under the supervision of scandal-tainted independent auditor Arthur Andersen LLP. Qwest said its new auditors KPMG have recommended the revenues be restated.

Qwest said it could not disclose the magnitude of the restatement, but it did not rule out the possibility that other optical revenues may face the same fate. KPMG is currently analyzing Qwest’s finances for the last two years and may recommend adding other transactions to the adjustment list.

Qwest share’s rose slightly after yesterday’s announcement, increasing to $2.90, up 5 cents, but sank to $2.78 in afternoon trading.

-- Kevin Fitchard, staff writer