Nacchio Resigns; Notebaert Takes Qwest’s Helm

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

Like many telecommunications companies today, Qwest faces a multitude of problem 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 replacement is Richard C. Notebaert, the former chairman and CEO of regional bell operating company Ameritech. Notebaert also has 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 today during an investor conference call.

Qwest executives said the new 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 negotiatinos 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, Noebaert 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 Monday.

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 operating a 190,000-mile global network with more than 50,000 employees, Popoff said.

“The board is deeply appreciative of his considerable contributions to the company’s growth and successful strategic evolution,” 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 non-executive chairman of the board, but he remains a director and chairman of the board’s executive committee.

Qwest’s shares were up 19 percent Monday afternoon on the New York Stock Exchange, trading at $4.93.

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