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Communications Workers Oppose Qwest Bid for US West and Frontier Communications
The 630,000-member Communications Workers of America today issued the following statement supporting Global Crossing's proposed merger with Frontier Communications and US West and opposing the rival bid by Qwest.
As two suitors compete to merge with US West and Frontier Communications, CWA supports the Global Crossing bid as consistent with our vision of telecommunications mergers based on new investment that expands competition and creates good jobs, and we oppose the rival bid by Qwest as a throwback to the days of corporate raiding. The Qwest deal is bad for workers, customers and the U.S. economy.
Qwest proposes cuts in operations and building new networks to finance the transaction. Qwest plans to cut $6.7 billion to $7.1 billion in network operations and maintenance, sales and marketing, billing and customer support, which will mean substantial job loss. Qwest projects it will reduce capital expenditures between $3.8 billion and $4 billion "by eliminating duplication in the three companies' planned network buildouts." The Qwest bid reduces facilities-based investment and competition, and since Qwest and Frontier networks overlap, the merger would lessen competition in long distance.
Significantly, the Qwest merger plan would combine the income and balance sheets of the three companies, creating cost-cutting pressure and further deterioration of service quality in the local exchange business to meet investor expectations of a "high-growth company." Global Crossing on the other hand proposes two tracking stocks - one for the local exchange assets and one for the high-growth business. Thus, job cuts in the local exchange cannot be used to inflate profits and stock prices in the high-growth portions, and investors will be able to judge the results of each line of business.
There is a startling contrast between the growth strategy of Global Crossing and the cost- cutting approach of Qwest as seen in their merger plans. Global Crossing projects $3-6 billion growth in the local exchange business - particularly by expanding digital loop technology -- and $15-30 billion in international growth as a result of the combination with Frontier and US West. Qwest, however, sees only about $3 billion in net revenue gains - one tenth of the vision of Global Crossing.
Quite clearly, Qwest stands for an old-style slash-and-burn merger strategy while Global Crossing stands for growth.
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As two suitors compete to merge with US West and Frontier Communications, CWA supports the Global Crossing bid as consistent with our vision of telecommunications mergers based on new investment that expands competition and creates good jobs, and we oppose the rival bid by Qwest as a throwback to the days of corporate raiding. The Qwest deal is bad for workers, customers and the U.S. economy.
Qwest proposes cuts in operations and building new networks to finance the transaction. Qwest plans to cut $6.7 billion to $7.1 billion in network operations and maintenance, sales and marketing, billing and customer support, which will mean substantial job loss. Qwest projects it will reduce capital expenditures between $3.8 billion and $4 billion "by eliminating duplication in the three companies' planned network buildouts." The Qwest bid reduces facilities-based investment and competition, and since Qwest and Frontier networks overlap, the merger would lessen competition in long distance.
Significantly, the Qwest merger plan would combine the income and balance sheets of the three companies, creating cost-cutting pressure and further deterioration of service quality in the local exchange business to meet investor expectations of a "high-growth company." Global Crossing on the other hand proposes two tracking stocks - one for the local exchange assets and one for the high-growth business. Thus, job cuts in the local exchange cannot be used to inflate profits and stock prices in the high-growth portions, and investors will be able to judge the results of each line of business.
There is a startling contrast between the growth strategy of Global Crossing and the cost- cutting approach of Qwest as seen in their merger plans. Global Crossing projects $3-6 billion growth in the local exchange business - particularly by expanding digital loop technology -- and $15-30 billion in international growth as a result of the combination with Frontier and US West. Qwest, however, sees only about $3 billion in net revenue gains - one tenth of the vision of Global Crossing.
Quite clearly, Qwest stands for an old-style slash-and-burn merger strategy while Global Crossing stands for growth.
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