Verizon and Qwest in Talks?
Light Reading reports on rumors that Verizon is considering an acquisition of Qwest. The supposed rationale is that Verizon routes PacRim calls through Qwest, and would be in too weak a bargaining position for interconnection rights should AT&T make the acquisition instead. It would also give Verizon a big broadband backbone.
We are going to call bull on this one. Verizon would definitely like to make a wireless deal – preferably to buy out Vodafone and own Verizon Wireless outright. If it can’t take out VOD, it would probably take a look at Alltel (AT - Annual Report) once that company spins out its local access lines. This would allow Verizon to increase its relative ownership and exposure to the wireless unit. It already has broadband backbone through the MCI acquisition and if T plays hardball on interconnect there could be antitrust implications at this point.
None of these arguments preclude an acquisition of Qwest, of course. It is just that we would view such a deal as a sign of weakness on Verizon’s part and it would definitely take away from the name’s appeal.
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