NEW YORK — Local phone company BellSouth Corp. said Monday that it will buy a 10% stake in Qwest Communications International Inc. for $3.5 billion, an investment that will lay the groundwork for BellSouth's eventual move into the long-distance phone business.
Qwest, the No. 4 U.S. long-distance company, will issue 20.35 million new shares to BellSouth in exchange for $1.93 billion in cash. Qwest's principal stockholder, Anschutz Co., will sell 16.65 million shares to BellSouth for $1.57 billion, reducing its stake in Qwest to 39%.
BellSouth has an option to boost its Qwest stake to 20% once the Atlanta-based Baby Bell wins approval to provide long-distance phone service in its home region.
Shares of Denver-based Qwest closed unchanged at $82 on Nasdaq. Shares of BellSouth gained 69 cents to close at $41.88 on the New York Stock Exchange.