Qwest declares quarterly dividend as sign of confidence in sustainability of cash flow levels

By Jennifer Lanning Drey

Portland, Ore., Feb. 12 - Qwest Communications International, Inc. declared a quarterly dividend for the first time in more than six years, demonstrating the company's confidence that it can sustain current profitability and free cash flow levels, John Richardson, Qwest's chief financial officer, said Tuesday during the company's fourth-quarter earnings conference call.

The quarterly dividend payment will be $0.08 per share for all shareholders as of Feb. 1 and was initiated under Qwest's strategy of balancing investment and profitable growth with return to shareholders.

"This is key because we have to be disciplined in how best to deploy capital for growth and to continue to reward our shareholders," Edward A. Mueller, Qwest's chief executive officer, said during the call.

Richardson later reported that cost reductions, operating improvements and continued discipline related to capital investments led Qwest's adjusted free cash flow to hit $1.8 billion for the full-year 2007. The amount represents a $405 million increase over 2006.

In the fourth quarter, Qwest generated $640 million of adjusted free cash flow, with sources of cash more than offsetting a slight increase in capital expenditures related to the company's continued investment in broadband, Richardson said.

Qwest ended 2007 with cash and cash equivalents of $902 million.

Richardson said the company believes it needs to maintain a cash balance of between $750 million and $1 billion, particularly in the current credit market environment.

Qwest additionally reported Tuesday that it reduced net debt to $13.1 billion in 2007, down by $259 million from a year ago.

For the fourth quarter, Qwest reported earnings of $366 million, compared with $194 million in 2006, according to the company's earnings release.

"Our results in 2007 reflect good execution against previously stated goals while establishing the financial flexibility and resources to successfully implement our strategic initiatives and create value for all Qwest stakeholders," Richardson said.

Also under the company's plan to return cash to shareholders, Qwest announced it had completed 74% of its $2 billion stock repurchase program at Jan. 31.

Qwest is a Denver-based telecommunications company

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