Qwest Leaves Sprint for Verizon Wireless

Qwest signs a five-year agreement to market and sell Verizon Wireless service beginning this summer.
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Voice- and data-services provider

Qwest Communications

(Q)

is deserting

Sprint Nextel

(S) - Get Report

to partner with rival

Verizon

(VZ) - Get Report

for its wireless presence.

Qwest said late Monday it has signed a five-year agreement to market and sell Verizon Wireless service beginning this summer. Verizon Wireless is the joint venture between

Vodafone

(VOD) - Get Report

and Verizon. Financial terms of the agreement were not disclosed.

Shares of Qwest fell nearly 1% during Monday's regular session but recovered those losses in late trading.

Under the agreement, Qwest customers will have access to the full-line of Verizon Wireless handsets and smartphones, including

Research In Motion's

(RIMM)

Blackberry devices. Under its existing deal with Sprint, Qwest was responsible for supplying its customers with handsets. Qwest's contract with Sprint is set to expire in February 2009.

Qwest subscribers can also receive high-speed broadband wireless from Verizon Wireless. Residential customers will be billed directly by Verizon Wireless or be allowed to bundle those services with Qwest's triple-play package for home phone, Internet and video.

"We are excited to be partnering with Verizon Wireless and believe this opportunity will enhance the Qwest customer experience," said Qwest CEO Ed Mueller. "Qwest's strategies for success certainly will benefit from this deal and we look forward to a solid relationship with Verizon Wireless."

In February, Mueller complained that Qwest had a "hole in wireless" during an analyst meeting, a clear sign of his displeasure over its partnership to resell Sprint's services. Qwest, which has reported diminished sales results as traditional phone lines have faded, is hoping a new partnership with Verizon Wireless will fulfill its need for a foothold in the wireless arena.

Qwest is due to report first-quarter earnings ahead of Tuesday's open, with analysts expecting the company to post a profit of 10 cents a share on revenue of $3.42 billion, according to Thomson Reuters.

Qwest's switch to Verizon Wireless is another setback for Sprint,

which had a busy Monday amid rumors

of a takeover by

Deutsche Telekom

(DT) - Get Report

as well as a possible spinoff or sale of its Nextel unit, which the company acquired in 2005.

With customer attrition already a high concern for Sprint's CEO Dan Hesse, the loss of Qwest as a customer means the loss of some 860,000 customers. Still, Sprint jumped 10.5% Monday to $8.72 and was slightly higher in late trading.