Up Close & Personal with Qwest’s Mystery Man

CEO Mueller Takes on FTTN, Out-of-Region Expansion

JANCO Partners’ Donna Jaegers

Second, Mueller and Notebaert had worked together at SBC/Ameritech. This primed Mueller as a knowledgeable acolyte able to take Notebaert’s vision to the next level. It also meant the Qwest board wouldn’t be relying on an outsider who might upend five years’ worth of hard work. That’s how much time it took for Notebaert to restore Qwest’s profitability and credibility after Joe Nacchio defrauded Qwest of millions of dollars and financially drove the company into the ground. Nobody wanted to chance wasting Notebaert’s efforts. And so, Notebaert told analysts in an Aug. 13, conference call, Mueller was his No. 1 recommendation to the Qwest board to be his successor.

“He’s perfectly built for this with his experience as CEO in retail and over three decades in the [telecom] sector,” said Notebaert.

Analysts agree.

“Qwest does not need another Joe Nacchio,” says Lisa Pierce, vice president at Forrester Research Inc. “My sense is that [Mueller’s] carrying out a lot of the things that were put in place before — there’s nothing wrong with doing that. It was a good plan.”

Jaegers concurs. Notebaert paid down debt, improved cash flow and settled the lawsuits levied against Qwest during Nacchio’s era, she says. Notebaert also “gave the company new options on what they could do going forward. And now I see Mueller’s role as figuring out which options he wants to play and executing on that.” Mueller spent his first four months doing just that. He says he didn’t want to act rashly. “[E]ven though I came from a background in the business, I think it’s always smart to sit and listen, explore, dig into everything this company does,” he says.

That doesn’t mean Qwest isn’t moving forward, however.

Probably the biggest new recent initiative at Qwest was announced Oct. 30, when Mueller revealed the company’s plan to move $200 million from the maintenance section of the budget to fund a FTTN buildout. The network is expected to reach an as-yet-specified set of existing homes within the Qwest footprint to provide speeds of up to 40mbps. Qwest already has put $100 million into the project. Beyond that, few details were available on the FTTN project as of press time in late November.

The absence of particulars around the FTTN news is exactly what bothered some analysts during Qwest’s Oct. 30 third-quarter earnings call.

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