EXHIBIT 99.1
QWEST COMMUNICATIONS AND U S WEST ANNOUNCE
STRATEGIC MERGER
TO CREATE $65 BILLION WORLDWIDE COMPANY
Next-Generation Company Will Deliver High-Speed Internet Connections and
Integrated Services to Homes and Businesses
$69 in Qwest Stock For Each Share of U S WEST
Qwest Withdraws Offer for Frontier;
U S WEST Terminates Merger Agreement With Global Crossing
DENVER, July 18, 1999 - Qwest Communications International Inc. (Nasdaq: QWST)
and U S WEST, Inc. (NYSE: USW) today agreed to a strategic merger creating an
aggressive competitor that will offer customers in the United States and
Worldwide more choice and greater access to next-generation broadband Internet
and telecommunications services.
The combination of Qwest and U S WEST, to be named Qwest Communications
International Inc., will bring together the world's most advanced network
providing broadband Internet communications -- from Qwest -- with the most
innovative local communications and the nation's leader in providing high-speed
Internet access through advanced DSL (Digital Subscriber Line) technology --
from U S WEST.
Qwest and U S WEST together will have a $65 billion market capitalization; $18.5
billion of pro forma year-2000 revenue; and $7.4 billion of pro forma year-2000
EBITDA (earnings before interest, taxes, depreciation and amortization). The
transaction will be accounted for as a purchase and is structured to be tax-free
to U S WEST shareowners to the extent of the Qwest stock delivered in the
transaction.
The combined company expects to realize revenue synergies of $12 billion over a
five- and-one-half-year period after closing. There also would be financial and
operational scale and scope through lower unit costs realized by serving an
expanding base of more than 29 million customers, including U.S. and European
multinational firms. It is expected that the combination will be accretive to
Qwest's earnings per share in the first year following completion of the
transaction.
Separately, Qwest announced that it had withdrawn its offer to acquire Frontier
Corporation. U S WEST also announced that it had terminated its merger agreement
with Global Crossing.
The top executive position in the new company will be held by Joseph P. Nacchio,
who will continue as Chairman and CEO of Qwest. Solomon D. Trujillo, now
Chairman, President and CEO of U S WEST, will be a Chairman of Qwest and
president of the combined company's broadband local and wireless business.
Mr. Nacchio, Mr. Trujillo and Philip F. Anschutz, now the Chairman of the Board
of Qwest, will form an Office of the Chairman of the new company, which will
oversee general corporate strategy, annual budgets and goals, as well as
approval of any acquisition or disposition of a business, and the allocation of
capital resources. Mr. Anschutz will serve as non-executive Chairman of the
combined company's 14-member Board of Directors, which will be represented
equally by the two companies, including Messrs. Nacchio and Trujillo.
Mr. Anschutz said, "I am proud to announce the merger of two very different
industry leaders, Qwest and U S WEST, into what will be the most technologically
advanced, aggressive and complete Internet-communications company in America. It
is a merger of powerful symmetry bringing together the most advanced, broadband
fiber-optic system with the most technologically advanced local communications
company."
"This combination will create significant benefits for customers, employees and
shareholders," said Mr. Trujillo. "Together we will create a powerhouse with
end-to-end reach, innovative products, integrated wireline and wireless
services, and broadband and Internet capabilities that are truly cutting edge."
Mr. Nacchio said, "This transaction positions Qwest to be the benchmark,
large-cap growth company in the new millennium. Together we will have the scale,
scope and growth characteristics to deliver greater long-term value for our
shareowners."
"We will achieve our targets by giving customers more choice and superior
service, bringing competition and the best in telecommunications services to the
marketplace. In addition, we will move rapidly to achieve the necessary freedoms
to offer long-distance service to all of our customers," Mr. Nacchio said.
Mr. Anschutz said, "Joe Nacchio has led Qwest through the completion of the
country's first fiber-optic network and into Qwest's position as the world's
pre-eminent Internet-based communications company. His truly remarkable insight
into the convergence of traditional communications and the most sophisticated
Internet technology and applications has created the global communications giant
for the next millennium, reaching from the United States to Europe, Asia and
Mexico. Joe's vision and tenacity will drive the new Qwest towards achieving our
goal of creating the most complete advanced, reliable Internet-based
communications company in the world."
Mr. Anschutz also said, "Sol Trujillo has taken a traditional regional Bell
company and transformed it into a visionary, technologically advanced company. U
S WEST was the first company in the country to develop high-speed DSL technology
and now has nearly 50 percent of the market share, and U S WEST is so far the
only company in America to market an advanced wireless PCS system that
integrates wire-based and wireless technologies. Sol's vision, innovation and
aggressive pursuit of new technologies and markets have led U S WEST to the
forefront in high-speed, Internet and data access."
Mr. Anschutz added, "The new Qwest will create solid, value-oriented growth, and
will provide business and residential customers with the best and most reliable
service available."
Terms of the Transaction
Under terms of the merger agreement, Qwest will issue shares of its common stock
having a value of $69.00 for each share of U S WEST common stock, subject to a
"collar" on Qwest's average stock price between $28.26 and $39.90 per share. The
number of Qwest shares to be issued for each U S WEST share will be determined
by dividing $69.00 by the average of the daily volume weighted average prices of
Qwest common stock for 15 randomly selected trading days over a 30-day
measurement period ending three days before the closing of the transaction,
provided that Qwest will not issue more than 2.44161 shares for each U S WEST
share or less than 1.72932 shares for each U S WEST share.
The obligation, if necessary, under the "collar" may be satisfied in whole or in
part with cash if Qwest's average stock price is below $38.70 per share. In
determining the cash amount for the collar, Qwest and U S WEST will consider
Qwest's desire to reduce dilution to its shareowners, U S WEST's potential
desire to provide a cash element to its shareowners and both companies' desire
to maintain the company's strong financial condition. If the companies decide to
provide cash as part of the collar consideration, the minimum exchange ratio
would be 1.783.
U S WEST may terminate the merger agreement if the closing price of Qwest's
shares is below $22.00 for 20 consecutive trading days before the closing, or if
the average Qwest share price during the measurement period is less than $22.00.
The Boards of Directors of both Qwest and U S WEST have unanimously approved the
proposed merger. The merger is subject to approval by the shareowners of both
companies, federal and state regulatory approvals and other customary closing
conditions. Mr. Anschutz, who beneficially owns approximately 39 percent of the
outstanding shares of Qwest, has agreed to vote his shares in favor of the
merger. Closing of the merger is expected by mid-2000.
In connection with the termination of the U S WEST and Global Crossing merger
agreement, U S WEST paid Global Crossing a break-up fee of $140 million in cash
and agreed to return $140 million in Global Crossing shares, valued at $62.75
per share, purchased by U S WEST in connection with its agreement with Global
Crossing. Qwest advanced to U S WEST the $140 million cash payment and agreed to
purchase $140 million in services from Global Crossing over four years at the
best commercially available prices.
People, Systems to Grow Internet Services
The combined company will employ approximately 64,000 people. Its headquarters
will be located in the U S WEST headquarters building in downtown Denver and it
will continue to be listed on the Nasdaq National Market under Qwest's existing
trading symbol, "QWST."
Mr. Nacchio and Mr. Trujillo said that the new company will draw upon its
combined employee base and billing and provisioning systems to achieve greater
local connectivity for new Internet services. Building from U S WEST's largest
markets, such as Denver, Minneapolis, Phoenix, Portland, Salt Lake City and
Seattle, the combined company will be an even more powerful Internet-based
competitor across the country and throughout the world.
Qwest said that as of the merger closing it would divest itself of its interLATA
(Local Access and Transport Area) long-distance services in the U S WEST region
to comply with the federal Telecommunications Act that currently restricts such
operations. U S WEST said that it intended to accelerate its efforts to provide
unrestricted long distance services to comply with the Telecommunications Act.
Technology Will Drive the Growth of the New Enterprise
To enhance its ability to provide advanced applications and services, the new
company will continue to build on Qwest's and U S WEST's technology alliances
with Cisco, Hewlett-Packard, Microsoft, Oracle, SAP America, Siebel Systems and
Sun Microsystems, as well as its strategic investments in Advanced Radio Telecom
Corp., Critical Path, BackWeb and Intertainer.
In addition, Qwest and U S WEST will leverage the skill sets and distribution
channels Qwest has acquired through its recently announced joint venture with
KPMG, called Qwest Cyber.Solutions, to sell new Internet and Web hosting
e-commerce products into U S WEST's robust business markets.
Customer Benefits of the Transaction
The combination of the companies will generate many additional customer
benefits:
- - The Qwest/U S WEST merger increases competition because its fiber and DSL
broadband technology offers the most substantial and distinctive alternative to
AT&T's cable-telephony service.
- - As the nation's leader in DSL high-speed Internet access, U S WEST currently
has deployed the service in more than 40 cities to central offices serving 5.5
million customer households. Qwest/U S WEST plans to aggressively deploy DSL to
customers in major markets across the U.S.
and ultimately worldwide.
- - The implementation of the shared growth strategy of each company, including
deployment of the industry-leading Internet Protocol (IP) platform, will
accelerate local broadband connectivity services for millions of customers.
- - Enhanced leadership in value-added Internet services through the combination
of seven Qwest CyberCenter Web-hosting facilities with U S WEST's !NTERPRISE
data networking business, which currently serves 225,000 Internet access
customers.
- - Qwest's next-generation network allows customers to navigate the Internet at
high speed in the U.S. and beyond...
- Qwest's reliable, scalable and secure Macro Capacity Fiber Network,
spanning 18,500 miles in the U.S., combined with U S WEST's 40,400-mile
network, as well as Qwest's undersea cables connecting the U.S. with
Japan and the Asia-Pacific region.
- Qwest's venture with KPN, the Dutch telecommunications company, to
build and operate a high-capacity European fiber-optic, IP-based
network -- extending 2,100 miles today and 8,100 miles when it is
completed in 2001 - to be linked to Qwest's U.S. network via undersea
cables.
- Qwest/U S WEST will continue to aggressively deploy advanced PCS
wireless services. U S WEST currently offers its innovative, integrated
Advanced PCS service to some 300,000+ customers throughout the West and
Midwest.
- U S WEST Dex continues to be an industry leader with the availability
of its Internet Yellow Pages. This service provides customers with
continuously up-to-date directory information available from the
Internet. More than two million users visit the site monthly, a
threefold increase from early 1998.
- Qwest/U S WEST commits to aggressively taking steps to enter the long
distance market across U S WEST's 14-state region.
Financial Benefits of the Transaction
Qwest and U S WEST expect the combined company to have a compounded average
annual revenue growth rate of approximately 15-17 percent, and a targeted
compounded annual EBITDA growth rate of 20 percent, in each case for the period
2000 through 2005.
The combined company expects to realize revenue synergy of $12 billion over a
five-and-one-half-year period after closing. In addition, the combined company
expects to achieve cost savings of $4.4 billion, and capital-expenditure
synergies in excess of $2 billion over the period.
After closing, the new company initially will pay a quarterly dividend of
$0.0125 per Qwest common share. U S WEST intends to pay a quarterly dividend of
53.5 cents until the closing of the transaction.
Qwest's financial and legal advisers on the transaction are Donaldson, Lufkin &
Jenrette and Davis Polk & Wardwell, respectively. U S WEST's financial advisers
are Lehman Brothers and Merrill Lynch, and its legal advisers are Cadwalader,
Wickersham & Taft.
About U S WEST
U S WEST (NYSE: USW) provides a full range of telecommunications services -
including wireline, wireless PCS, data networking, directory and information
services - to more than 25 million customers nationally and in 14 western and
midwestern states. More information about U S WEST can be found on the Internet
at www.uswest.com.
About Qwest
Qwest Communications International Inc. (Nasdaq: QWST) is a leader in reliable
and secure broadband Internet-based data, voice and image communications for
businesses and consumers. For more information, please visit the Qwest web site
at www.qwest.com.
This release contains forward-looking statements that involve risks and
uncertainties. These statements may differ materially from actual future events
or results. Readers are referred to the documents filed by Qwest and U S WEST
with the SEC, specifically the most recent reports which identify important risk
factors that could cause actual results to differ from those contained in the
forward-looking statements, including potential fluctuations in quarterly
results, dependence on new product development, rapid technological and market
change, failure to complete the network on schedule and on budget, financial
risk management and future growth subject to risks, the companies' ability to
achieve Year 2000 compliance, and adverse changes in the regulatory or
legislative environment. This release may include analysts' estimates and other
information prepared by third parties for which the companies assume no
responsibility. The companies undertake no obligation to review or confirm
analysts' expectations or estimates or to release publicly any revisions to any
forward-looking statements to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.
The Qwest logo is a registered trademark of Qwest Communications International
Inc. in the U.S. and certain other countries. The U S WEST logo is a
registration trademark of U S WEST, Inc. in the U.S.
Contacts: Qwest Communications U S WEST
Tyler Gronbach (Media) David Beigie (Media)
(303) 992-2155 (303) 896-5528
tyler.gronbach@qwest.com Pager: (800) Sky-Page, #2553129
dbeigie@uswest.com
Lee Wolfe (Investors) Dave Banks (Investors)
800-567-7296 (303) 896-3040
ir@qwest.com Pager: (888) 988-7324
dbanks@uswest.com