Qwest Pulls Plug on Network Sale

Updated from 12:52 p.m. EDT

Shares of telecom firm Qwest(Q Quote) plunged Monday after the carrier ditched its plans to sell its long-distance network.

The Denver, Colo.-based firm had been looking for bidders for its national fiber-optic network business, part of a long-term strategy to rein in costs and reduce debt.

The news pushed Qwest's shares down Monday as investors digested the news. Qwest's shares fell 24 cents, or 5.8%, to $3.93, outpacing the broader decline in tech stocks that saw the Nasdaq slip 0.4%.

"Although there was significant interest in this process from prospective buyers, the company and its board of directors have determined that the long-distance network asset holds far more value to Qwest shareholders," said the company, in a statement.

The Wall Street Journal recently reported that Qwest had received bids below the $2 billion to $3 billion it had originally sought for its long-distance business. Level 3 Communications(LVLT Quote), XO Communications, and TW Telecom(TWTC Quote) were all cited as potential purchasers, although Qwest has now decided to end the sale.

"[The long-distance network] is more strategically important to Qwest and its customers than is the alternative of pursuing a transaction," the company added, in its statement.

Qwest, which was recently upgraded by JP Morgan, also reaffirmed its 2009 guidance, and expects free cash flow between $1.4 billion and $1.5 billion. For the full year, Qwest anticipates adjusted EBITDA of $4.2 billion to $4.4 billion.

"Qwest remains confident in its outlook for 2009 and the ability of its businesses to continue to perform," said Edward Mueller, the Qwest CEO, in a statement. "We have always taken a disciplined, prudent approach to assessing our business in this ever-changing industry."