UBS: Qwest could be bought by smaller RLEC

Qwest Communications (NYSE: Q) “could become a target of rural wireline consolidation,” according to UBS analyst John Hodulik. “Despite its much larger size, we believe Qwest could become a takeover candidate” for CenturyLink (NYSE:CTL) or even Windstream (NASDAQ:WIN), he said in a research note this week. Piper Jaffray analyst Chris Larsen made a similar observation earlier this month.

A deal like that is easier to imagine after CenturyTel’s purchase of much-larger Embarq this year. And it would probably have to wait until CenturyLink or Windstream had integrated their newly acquired assets – perhaps the middle of next year, Hodulik said. Both CenturyLink and Windstream have indicated they’re not done yet with M&A.

But Hodulik’s prediction is 180 degrees from those made by other analysts this spring, when Qwest was reportedly exploring selling off its long-haul network. Funds from such a sale could have allowed the carrier to roll up other rural carriers, analysts said at the time. But a sale never took place.

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