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Qwest Pulls Long-Distance Bids for 9 States

Telecom: Company says it plans to refile the applications after addressing questions about its accounting.

September 11, 2002|JEREMY PELOFSKY | REUTERS

WASHINGTON — Qwest Communications International Inc. said Tuesday that it withdrew its bids to offer long-distance telephone and data service in nine states because of problems with its accounting methods.

The company, which recently said it would restate results for 1999 to 2001 after misreporting $1.6 billion in sales, has to prove to the Federal Communications Commission that its local telephone networks in the states are open to competition to begin offering the long-distance services.

"While we are going to clean up this technical issue, it has no effect on what we have done to open up to competition," said Steve Davis, Qwest senior vice president of policy and law. "We'll correct the situation and refile within a few weeks."

The FCC was scheduled to rule today on the application covering Colorado, Idaho, Iowa, Nebraska and North Dakota and on Oct. 10 for Montana, Utah, Washington and Wyoming. The Denver-based company said it plans to refile the applications by the end of the month and then for three other states--New Mexico, Oregon and South Dakota--in October.

The company previously offered the services in 14 states but had to exit that business line after acquiring local telephone firm US West in 2000 until it had proved to federal regulators that its networks there are open to competition.

The Telecommunications Act of 1996 bars dominant local telephone carriers from providing long-distance voice and data services until they give rivals access to the network of wires that connect homes and businesses as well as databases for entering new orders.

The law also requires the company's books to conform to generally accepted accounting principles, but because Qwest is restating its results, the panel was poised to reject the applications.

"Despite extensive examination of the record supporting these applications, questions remain regarding whether Qwest has complied with the safeguards set forth by Congress," FCC Chairman Michael K. Powell said.

Qwest is the only regional Bell operating company of the four big carriers that has yet to win approval to offer long-distance telephone service in any of its home territory. Verizon Communications Inc. has won approval for eight states, SBC Communications Inc. has received permission for long-distance services in five states, and BellSouth Corp. has approval in two states.

Shares of Qwest fell 13 cents to $3.04 on the New York Stock Exchange.

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