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BellSouth may seek QWest
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June 9, 1999: 9:31 a.m. ET
Baby Bell eyes control of long-distance provider after buying 10% stake
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LONDON (CNNfn) - BellSouth Corp. is mulling a possible bid for control of Qwest Communications after recently acquiring a 10 percent stake in the long-distance carrier, according to a filing with the U.S. Securities and Exchange Commission.
In the filing, Atlanta-based BellSouth indicated it could seek majority control in its new Denver-based partner if it wins legislative approval to offer long distance service in Qwest's current operating area.
At present all so-called "Baby Bells" -- regional phone companies created by the split-up of AT&T in the mid-1980s -- are prohibited from owning more than 10 percent of a long-distance carrier. But a concerted push by all the companies to have the law changed could result in that ban being lifted in at least one state by the end of the year.
BellSouth acquired 74 million Qwest shares on May 27 for roughly $3.5 billion. The company purchased 40.7 million of those shares directly from Qwest for $1.92 billion and acquired the remaining shares from Anschutz Co. for $1.57 billion.
In its filing, BellSouth said it "considered, and continues to explore . . . various alternatives relating to BellSouth's interest in [Qwest], including transactions which may result in the acquisition of a control position in, or combination with, the company."
In the meantime, BellSouth said it is also considering other strategic and commercial partnerships with the firm.
BellSouth holds an option to acquire a further 10 percent stake in Qwest or nominate one person to the company's board if it obtains regulatory permission to offer originating landline and terminating long-distance service in all nine Southeast states it serves.
In trading Tuesday, BellSouth (BLS) closed down 3 /4 to 46-1/8 while Qwest (QWST) shed 1-3/4 to 43-5/16. 
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BellSouth
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