CBSN

More Questions At Qwest

Richard Notebaert headshot, as QWEST Communications International chairman and CEO, 6-17-02, against backdrop of Qwest logo on black, 4-2-02
AP / CBS
Qwest Communications International Inc. plans to restate $531 million in revenue that was improperly recognized and take nearly $11 billion in charges for the reduced value of its telephone and fiber optic networks in its continuing review of past accounting practices.

The Denver-based regional Bell company also said Monday it might have to write down $30 billion from the lowered value of assets it bought in its 2000 acquisition of US West.

In a release after the markets closed, Qwest said it would restate $531 million in revenue from cash sales of capacity on its fiber-optic network. Originally the company recognized the revenue immediately but now it plans to book the revenue over the term of the agreements, which can range from five to 30 years, Qwest spokesman Tyler Gronbach said.

Of that $531 million, $331 million was recorded in 2001 and $200 million was recorded in 2000.

Last month, Qwest reversed $950 million in revenue it had booked from swaps of capacity on its fiber-optic network and said the money from capacity sales also might have to be restated.

After consulting with its new auditor, KPMG LLP, Qwest said Monday it will treat cash sales of optical capacity as operating leases and recognize the revenue from these assets over the life of the agreement. Such sales this year will not be affected by the accounting change, Qwest said.

The charges include an $8.1 billion reduction in the value of its telephone network, global fiber optic broadband network and related assets and a $2.7 billion reduction in the value of assets related to customer lists and product technology.

The Securities and Exchange Commission is investigating whether the swaps helped Qwest artificially boost revenues. Qwest also is the subject of a Justice Department investigation.

Qwest shares rose 20 cents Monday to close at $3.46 on the New York Stock Exchange. They fell 18 cents in extended trading.