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Technology

BellSouth Will Acquire a 10% Stake in Qwest

April 20, 1999|From Reuters

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.

Initially, the two companies will market their services together, with BellSouth providing local phone services and Qwest providing data networking, Internet and long-distance phone services.

Once BellSouth wins approval to offer long-distance services, the companies will use each other's assets and services to develop products for business customers. The companies will focus heavily on high-speed data services.

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