What would you recommend if you had Stephanie Comfort's job? It's an interesting question, though not an easy one. Comfort is executive vice president of corporate strategy at Qwest Communications International Inc. As with all phone companies, Qwest's pool of old-fashioned, copper-wire phone customers is diminishing. Alas, Qwest has no wireless arm to offset the losses. And while it has had success selling Internet telephony, hosting and other evolving services to businesses, it lacks the clout AT&T Inc. and Verizon Communications Inc. have in these areas.
Previously Qwest's investor relations head, Comfort was formally tapped by CEO Edward Mueller to head the strategy team in February, although she took on the role in September. For now, at least, it appears that her efforts will be devoted more to strengthening and developing partnerships, such as Qwest's pact with DirecTV Group to bundle satellite television with phone and Internet services, than to transformational M&A.
Comfort became Qwest's head of investor relations in 2002 during a tumultuous period. CEO Joseph Nacchio, who won an appeal of a conviction for insider trading of Qwest shares but faces a new trial, was about to leave the company.
Incoming chairman and CEO Richard Notebaert led a complex restructuring of Qwest, viewed by many as a bankruptcy candidate. There were investigations into Nacchio and the company's financial reporting, massive restatements of the books, the $7.05 billion sale of the Yellow Pages operations and a bidding war with Verizon for MCI Inc., among other events.
Mueller, who took the helm in August, has outlined several priorities. Qwest would like to duplicate the success of its DirecTV partnership in other areas, such as wireless. Mueller is not satisfied with its current partnership with Sprint Nextel Corp. and is looking for "a bigger play" with a partner "who would be willing to play with us on a retail level." That could mean a new deal with Sprint Nextel, or with a rival such as Verizon.
Qwest also expects growth from its business and government services unit. It is a major contractor for the government's upcoming Networx project, which will pay telecom companies $40 billion or more to upgrade global federal communications systems over a decade. The company has more than 130 partners in its various Networx contracts, evidence of its knack for collaboration.
Other goals for Qwest are to improve operations and finances. The company wants to spend on dividends, stock repurchases and debt reduction. This year, Qwest paid its first dividend since 2001.
Comfort knows the industry well, having covered the telecom business for 17 years as an analyst at three different Wall Street firms. When announcing Comfort's appointment, Mueller cited her "deep financial background" and grasp of "the company's place in the lives of our customers." Good qualities, to be sure. But that lack of a wireless arm is a tough hand to play. -
Chris Nolter
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