Qwest Talking to AT&T for Wireless

Qwest Communications International Inc. is now speaking with AT&T Inc. as it decides where to move its 824,000 wireless subscribers, CEO Ed Mueller has confirmed. Last week Mueller said Qwest was in discussions with Verizon Communications Inc. on the same topic. Mueller said Qwest would make a decision “soon.”

An agreement with either cellco would supplant the MVNO deal Qwest has with Sprint Nextel Corp. when that contract expires early in 2009. The Sprint arrangement is “inadequate” according to comments from Mueller last week.

While AT&T can offer Qwest access to the iPhone, Verizon offers extensive service bundling opportunities. Qwest’s Sprint-based offering is a CDMA service, so moving subscribers to Verizon’s CDMA network would be a less painful transition for end users than going with GSM-based AT&T, requiring no handset exchanges.

Mueller said last week during his first call with investors since taking the CEO post six months ago that Qwest has serious holes in its strategy when it comes to wireless and that he aims to fill them. In fact, he said, wireless will be a key part of Qwest’s future strategy, particularly when it comes to wireless broadband and offering a compelling quad-play to compete with the cablecos that are ferociously competing with the carrier.

To that end, he said the company is looking to partner with someone in a way that looks a lot like its arrangement with DirectTV, which he said is an example of a positive relationship.

Qwest has been without wireless holdings since 2005, when it sold off its spectrum licenses to Verizon Wireless for $418 million.

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