Up Close & Personal with Qwest’s Mystery Man

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

Edward Mueller’s not one to tip his hand. It’s late afternoon at the beginning of November, near the end of a long week. Mueller’s tired. Just two days ago he endured a testy earnings call, his first as chairman and CEO of Qwest Communications International Inc. Now he’s had to cancel a dinner for tonight — it’s 5 p.m. and there are more meetings on the schedule. On top of that, moving boxes still sit unpacked in his new Denver-area home, a place he hasn’t seen in days. But none of that slows Mueller’s alertness. Still, when pressed to talk about his plans for Qwest, plans he had yet to reveal to any media, Mueller replies nearly each time with a secretive smile and an “I can’t tell you that.”

Qwest’s New Chairman and CEO Ed Mueller

It’s easy to see why analysts got frustrated with Mueller (pronounced “Miller”) during the earnings call when he declined to offer much in the way of a new direction for Qwest. Naturally, Mueller wants to appease antsy Wall Streeters, but he told analysts he was still deciding what needed to change and wouldn’t talk specifics until after the first of the year.

However, it seems that Qwest is sticking with DIRECTV for its television services even as it undertakes a project to pump higher bandwidth to homes via a new FTTN initiative, which would address bandwidth-hungry video applications. Qwest also is pushing its out-of-region sales to enterprises and government agencies.

Mueller, 60, has been at Qwest’s helm since August 2007. So this month kicks off a new and challenging year for him. He’s expected to emerge soon from his own quiet period, slated any time to present the results of a months-long “strategic review” that was to be wrapped up by the end of 2007. Those findings will tell Wall Street where Qwest is headed, which will affect the company’s ratings. At press time, seven out of 10 firms had upgraded Qwest’s ratings, with opinions varying between buy, hold and neutral.

Qwest’s new chairman and CEO returned to the Bell system after spending several years as head of Williams-Sonoma. His appointment by the board was unexpected (although in no way shocking) since his name hadn’t popped up in analysts’ predictions about who would replace retiring CEO Richard Notebaert. A number of observers figured there would be an openly aggressive successor, like Motorola Inc.’s Greg Brown, to get Qwest on par with its BOC rivals AT&T Inc. and Verizon Communications Inc. That didn’t happen, yet Mueller’s selection made sense on a couple of levels.

First, Mueller is a Bell insider. He was president and CEO of Ameritech Corp. from 2000 to 2002; had served as president of SBC International Operations from 1999 to 2000; and was president of Pacific Bell from 1997 to 1999. He had worked for SBC since 1968 in various capacities, including president and CEO of Southwestern Bell Telephone Co. The board made a smart decision, says Donna Jaegers, an analyst for JANCO Partners Inc., who covers Qwest extensively. “When you bring somebody in who’s a total outsider, it takes [them] so long just to get up to speed as far as what the organization is capable of, then how can [they] set a realistic strategy?” she says.

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