Qwest Communications International Inc. reported the Securities and Exchange Commission has expanded its investigation into the telecommunication provider’s accounting practices, and the company will restate more than $2.2 billion in sales of optical network capacity, equipment and services for its 2000 and 2001 fiscal years. Qwest added the restatement would result in a delay of its audited statements for 2002 and the first quarter of 2003.
Following its first quarter financial report that highlighted the SEC investigation, Fitch Ratings assigned a B rating to Qwest’s $1 billion term loan facility and confirmed its B rating on Qwest’s $7.1 billion senior unsecured debt. Fitch said the ratings reflect Qwest’s highly leveraged balance sheet, the uncertainty surrounding the ongoing SEC and Department of Justice investigations, the lack of audited financial statements and its liquidity position.
Fitch added that Qwest could deleverage its balance sheet with the continued sale of some of its non-strategic assets, including its wireless division.
“Fitch believes that the company can monetize non-core assets (wireless business and towers) to further improve the company’s liquidity position and balance sheet metrics,” the ratings agency said in a report.
Qwest yesterday reported declines in its wireless operating revenue, wireless customer base and average revenue per wireless user during the first quarter of 2003.
