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from: Denver Post

New Qwest CEO coy about future
Mueller says he will announce new directions by end of year
By Andy Vuong
The Denver Post
Article Last Updated: 12/02/2007 03:37:25 AM MST

DENVER - By year's end, Qwest Chief Executive Officer Ed Mueller will unveil his grand vision for the telecommunications company he took over in mid-August.
For some, the review is taking longer than expected, and when it is completed, don't expect drastic change.
Though specifics are still in the works, Mueller shed light on some moves Qwest will or will not make:
* The company is not looking to buy a cell phone company, even though the wireless business is generating plenty of cash for its much-larger peers, AT&T and Verizon Communications. ''We don't have wireless assets, and we're not going to go acquire wireless assets.''
* Qwest is not going to pursue a broad video play, either. ''We're not committing to a Verizon or AT&T whole video roll out. We're not becoming a TV provider.''
* Qwest will detail its expected returns for the additional $200 million the company plans to spend next year to boost broadband speeds. Those details may include which markets will see the investments, with denser cities likely to be at the top of the list.
* Down the road, Qwest may look to partner with third-party companies to offer high-bandwidth applications and content, such as video-on-demand, to leverage the faster speeds.
''We're just taking the whole company and looking at every part of it,'' Mueller said of his strategic review. ''A lot of it is just getting me up to speed.''
His training course is raising questions among some analysts.
''What are you attempting to bring to the table that's so significant that it's worth taking this six-month period to kind of not [talk] to the market?'' Bank of America analyst David Barden asked during Qwest's third-quarter earnings call in October, according to a transcript.
Since former Qwest CEO Dick Notebaert announced his retirement in June, the company's plans have been murky.
Qwest operates a nationwide fiber-optic communications network and is the primary local phone service provider in Utah and 13 other states. It is facing heated competition for residential customers from cable operators such as Comcast.
Analysts pressed Mueller for more details during the call in October, as Qwest's landlines continued their ongoing decline to 8.9 million, down 7 percent from a year ago.
Barden noted that Mueller is the only member of top management who is new to Qwest.
Mueller held firm, saying it was prudent for him to take until the end of the year to establish a plan.
The market hasn't reacted kindly to that approach. Qwest shares are trading at 52-week lows, in the $6-$7 range, amid the uncertainty about the company's direction.
Todd Rosenbluth, an analyst with Standard & Poor's, defended Mueller's decision.
''You've got a new CEO who has a different energy and a different philosophy on how to run a business than his predecessor,'' Rosenbluth said. ''We never expected quick decisions when he came in.''
It was widely viewed that during his five-year tenure, Notebaert tried to dress Qwest up for a sale, or as one analyst put it, ''put lipstick on a pig.'' Without any buyers, Mueller's job is to take the lipstick off and get the pig to perform.
Although the charismatic Notebaert was a salesman by nature, Mueller appears to be a numbers-crunching executive.
He is a champion of the so-called multivariable testing, which uses statistical analysis and quantitative models to gauge the effectiveness of ideas and plans. It is a tool he used as head of San Francisco retailer Williams-Sonoma and Chicago phone company Ameritech.
Though not directly tied to the strategic review, Mueller has implemented multivariable testing into some divisions at Qwest.
''It's very disciplined,'' said Stephanie Comfort, whom Mueller promoted from an investor-relations position to the top strategy role in September. ''It's very statistically based, so people in the organization can measure and see the effectiveness of their ideas in black and white.''
Analysts aren't expecting a groundbreaking plan when it's finally announced. The company will continue to resell Sprint Nextel wireless service and DirecTV satellite service as part of its residential bundle, which limits revenue growth.
After the tumultuous reign of Joe Nacchio, Qwest returned to profitability under Notebaert's direction, mostly through cost cuts and high-speed Internet growth.
''What I expect is for him to paint the broad outlines of a strategy,'' said Donna Jaegers, an analyst with Janco Partners. ''But probably not to announce an acquisition right away.''
Though Mueller said a cellular acquisition is not in the works, he didn't completely shoot down the possibility of purchasing a company to boost the enterprise business. The only acquisition Qwest has made recently is its roughly $100 million deal last year for OnFiber, a metro fiber company.
Jaegers said it could ''make a lot of sense for Qwest'' to purchase a regional license when the Federal Communications Commission auctions in January the 700-megahertz airwave spectrum - considered to be prime real estate for wireless applications.
She said Qwest could use the license for WiMax, a ubiquitous wireless-broadband technology that offers faster download speeds than traditional wireless fidelity, or Wi-Fi, networks.
Though Mueller declined to comment about the auction, it is clear high-speed Internet will be a key part of the company's future.
Qwest plans to spend up to $200 million on top of the $70 million to $100 million it had already earmarked for its fiber-to-the-node deployment, where the company runs fiber-optic cables to a neighborhood and uses copper loops to link homes to the node.
The project, which will cover 1.5 million homes, will give customers speeds of up to 20 megabits per second. Mueller said some homes may hit 40 mbps through parabonding, where the company runs two copper loops instead of one to double the speed.
Qwest's high-speed Internet ranges from 1.5 mbps to about 7 mbps.
The company is reviewing which markets it will target with the fiber project.
Mueller said whether the company has a cable-TV franchise in a certain market, such as Portland, will not factor into the decision. The company will look at deploying into areas where it can also reach businesses.
''We'll obviously look at density, where we can get the most bang for our dollar.''