Carrier Channel: Nacchio Resigns

Posted: 07/2002

Nacchio Resigns;
Notebaert Takes Qwest’s Helm

By Josh Long

The man who led Qwest Communications
International Inc. from an upstart telephony company into a global
communications giant, Joseph P. Nacchio, resigned June 16 as the firm’s chairman
and CEO.

Like many telecommunications
companies today, Qwest faces a multitude of problems as it aims to slash debt
and steer clear of regulatory violations as it waits for the economy within its
14-state local region to regain momentum.

Nacchio’s replacement is Richard C.
Notebaert, the former chairman and CEO of regional bell operating company
Ameritech. Notebaert most recently served as president and CEO of telecom
equipment manufacturer Tellabs Inc., but he is best known as the man who led
Ameritech from 1994 until 1999, when the company merged with SBC Communications
Inc.

Under Notebaert, Qwest will focus on
increasing "credibility on Wall Street," strengthening customer
relationships and maintaining a focus on regulatory issues, working closely with
the Federal Communications Commission and state regulatory agencies, Notebaert
said during an investor conference call shortly after the announcement of the
change was made.

Qwest executives said the
appointment of Notebaert does not signify a change in strategy or operations.

Still, it will be up to Notebaert to
turn around the Denver-based carrier, which has buckled under the same forces
clobbering many of its competitors: high debt, credit rating agency downgrades,
a depressed economy, a slowdown in corporate IT spending, a glut of fiber
capacity, a failed international joint venture and regulatory probes into its
accounting practices among other problems.

Qwest is in negotiations to sell
assets, including its money-making phone directory business, QwestDex, a unit
financial analysts say could fetch up to $10 billion.

During the teleconference, Notebaert
promised to be a forthright chief executive. "As those of you who know me
you know that I am a firm believer in communicating directly, openly and
often," Notebaert said. "The door is always open."

Under his leadership at Ameritech,
the company achieved five straight years of double-digit profit growth, said
Frank Popoff, Qwest board member and chairman of the compensation committee.

Notebaert has the "experience,
track record and the demeanor that should be very helpful in rebuilding
shareholder confidence in Qwest," said independent analyst Jeffrey Kagan in
prepared remarks.

While Nacchio said he decided to
leave to spend more time with his family and "pursue other
opportunities," sources say he had come under mounting pressure to resign
in the wake of financial and regulatory troubles plaguing Qwest, the Wall
Street Journal reported.

Kagan commended Nacchio’s
contributions during his five-year reign at Qwest. "When he took it over it
was a small upstart, little more than a good idea, and he built it into one of
the largest and most diversified service providers in telecom, spanning local,
long distance, fiber and data networks for both businesses and consumer
customers."

In fact, Nacchio’s track record is a
good one. He grew Qwest from a 400-employee company with $700 million in revenue
to nearly a $2 billion company that operates a 190,000-mile global network with
more than 50,000 employees, Popoff said.

Nacchio has agreed to serve as a
consultant to the company for up to two years.

In the meantime, Qwest also
announced Philip F. Anschutz has resigned as the nonexecutive chairman of the
board, but he remains a director and chairman of the board’s executive
committee.