Qwest Reports Revenue Growth

Qwest Communications International Inc. (www.qwest.com) today reported third quarter 2004 results that benefited from improved revenue trends, expanded margins and solid growth in cash flow from operations.

For the quarter, the fully diluted loss per share was $0.31 compared with a loss of $0.43 cents last quarter, which includes special items of $0.16 and $0.27, respectively. See attachment for detailed discussion of special items.

"The initiatives we began earlier in the year are delivering positive trends across all of our key growth areas, as evidenced by improved operating results in the quarter," said Richard C. Notebaert, Qwest chairman and CEO.

"Our continued focus on execution, as well as the continued progress in expanding our video, bundling, and VoIP initiatives, positions us for further growth and improved operating results in the fourth quarter and beyond."

Qwest's revenue totaled $3.45 billion in the quarter, a 0.2 percent increase sequentially and a 3.4 percent decrease from third quarter 2003. Revenue sequentially benefited from improved trends in wireline and wireless segments.

Qwest's third quarter wireline revenue totaled $3.3 billion, up 0.1 percent sequentially and down 2.9 percent from a year ago. Within the wireline segment, revenue benefited from improved trends across consumer, business and wholesale customer channels.

Improvements in Qwest's third quarter operating expenses were driven by further progress in cost management. Selling, general and administrative (SG&A) expenses continued to decline in the third quarter, down $98 million sequentially on a reported basis.

Cost of sales grew $61 million sequentially on a reported basis. Excluding the impact of the special items discussed below, cost of sales grew $70 million. Sequential wireline volume growth and wholesale costs associated with wireless usage resulted in higher cost of sales in the quarter, offsetting benefits of facilities cost optimization and employee cost savings.

"Our ability to improve operating results this quarter, along with focused cost and balance sheet management, and progress in our facilities cost optimization initiatives, fueled sequential margin expansion and solid improvement in our cash flow from operations," said Oren G. Shaffer, Qwest vice chairman and CFO. "We are pleased with our momentum exiting the quarter and believe we are well positioned to drive further revenue, margin and cash flow improvement."