November 3, 2010 / 1:21 PM / 9 years ago

WRAPUP 1-CenturyLink, Qwest sales decline, cut costs

* CenturyLink, Qwest suffer access line losses, cut costs

* CenturyLink Q3 sales $1.75 bln vs Wall St view $1.74 bln

* Qwest Q3 sales $2.94 bln vs Wall St view $2.90 bln

* Both slightly raise forecasts (Combines Qwest results, adds details on access line losses)

NEW YORK, Nov 3 (Reuters) - U.S. phone companies CenturyLink Inc (CTL.N) and Qwest Communications International Inc Q.N, which are planning to merge, reported lower third-quarter sales as more customers disconnected service to save money in a tough economy.

Both companies, however, cut costs and nudged up their forecasts, and their shares were little changed in early trading on Wednesday.

CenturyLink, which is awaiting final regulatory approvals to buy Qwest, said its third-quarter revenue fell 6.8 percent to $1.75 billion, as access line connections declined 7.8 percent. Wall Street analysts on average expected $1.74 billion in revenue, according to Thomson Reuters I/B/E/S.

Net income declined to $231.2 million from $280.8 million a year earlier. Excluding one-time charges, earnings per share fell to 83 cents from 90 cents, but beat Wall Street’s forecast of 81 cents.

CenturyLink said its previous acquisition of Embarq was yielding cost savings, and the company revised its full-year outlook for earnings, excluding special items, to a range of $3.36 to $3.40 per share from a previous forecast of $3.30 to $3.40.

Qwest’s quarterly revenue fell 3.9 percent from a year earlier to $2.9 billion, as access lines fell about 10 percent.

Its quarterly net loss of $90 million, or 5 cents per share, compared with a profit of $136 million, or 8 cents per share, last year. Excluding items, it earned 11 cents a share, beating the market’s average forecast by a penny.

Qwest expects revenue to continue declining in the fourth quarter, but at a more moderate pace than it previously expected: a low-single digit rate rather than a low- to mid-single digit rate it had forecast earlier.

The company also reported a 5 percent decline in total operating expenses, and reduced its debt to $11 billion at the end of the quarter compared to over $12 billion a year earlier.

Regional phone companies have struggled as more customers have been ditching their traditional phone services. Many of them have opted to use only mobile phones, or switched to cable service providers’ “all-in-one” packages of phone, Internet and video services.

Faced with the dilemma of trying to cut costs while also upgrading networks to attract high-speed Internet clients, many carriers are opting for mergers and acquisitions.

CenturyLink shares fell 1 cent to $41.82. Qwest shares rose 3 cents to $6.70. (Reporting by Ritsuko Ando and Jennifer Robin Raj in Bangalore, Editing by John Wallace and Derek Caney)

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