Qwest said it had lost $307 million in the 4th quarter, reversing...

revenue had partially offset continued competitive pressures in local voice and wireless services, as well as the de-emphasis of some non- core services. Qwest said in the 4th quarter it had lost access lines at the same rate -- 0.9% -- as the 3rd quarter. Excluding 145,000 MCI lines disconnected 2nd quarter, it said total access lines decreased 3.9% year-over-year. However, Qwest executives told investors in a conference call they expected slower access line declines in 2004 vs. 2003. They said line losses typically declined with Qwest entry into long distance. Qwest said it had strong growth in its long- distance and DSL businesses. It said it had increased its long distance subscriber base by 36% in the 4th quarter to 2.3 million customers. Since introduction of Qwest Choice, which bundles local, long distance and high-speed Internet services, in mid-Dec., Qwest said it had more than doubled its daily net subscriber additions. It said in the first 8 states it offered long distance, more than 26% of consumer lines included that service, exceeding the company’s 25% year-end target. Qwest said the number of DSL lines increased 10% in the quarter to 637,000. It said 80% of 2003 DSL growth came in the 2nd half, as the company expanded service to more than 1,000 additional neighborhoods and communities. The company said Qwest Choice had driven a 30% increase in weekly DSL line additions in early 2004, compared with a year earlier. Qwest said it planned to further expand DSL coverage to more than 60% from 45% of total access lines by year-end, making DSL available to more than 6 million homes. An AT&T spokeswoman said Qwest’s growth in long distance and DSL lines had made “crystal clear the wisdom of the Congress in pushing for a competitive telecom market… The Telecom Act is working and it’s vital for regulators and policy-makers to stay the course.” However, Qwest Chmn. Richard Notebaert said in the conference call: “There is no need for UNEs, and we have seen some of our utility commissions actually… put on pause hearings [on] UNEs.” Qwest said deployment of additional DSL facilities boosted capital expenditures for the quarter to $615 million from $561 million in the 4th quarter of 2002. For the full year, it said capital expenditures were $2.1 billion, compared with $2.8 billion in 2002. The company said total cost of sales plus other expenses for the quarter were $2.6 billion, compared with $2.5 billion for the 4th quarter of 2002, with investments to support products launches and increased pension and retiree healthcare costs driving the increase. Qwest Vice Chmn.-CFO Oren Shaffer said he expected the company to improve its free cash flow in 2004 by focusing on cost management; a $2 billion capital program; and lower interest expense. In 2003, Qwest recorded free cash flow from operations of $87 million -- a $463 million improvement over 2002. Qwest also said it had reduced total debt by $5 billion during 2003. During the quarter, the company said it completed the purchase of $3 billion of outstanding debt and cut its credit facility by $500 million. Qwest said it planned to expand VoIP coverage throughout the Minneapolis/St. Paul consumer market and introduce its business VoIP offering in the first half of 2004. It said it expected to offer VoIP services in all major metropolitan markets within its local region by the end of the year. In the call, Notebaert said VoIP would probably not become “truly significant” this year, but said: “As we are going forward, getting in there, being prepared, especially as cable competitors are going VoIP, is very important for us.” Qwest also said it continued to work with Sprint to introduce national wireless calling plans and said it planned to roll out the services March 1 to customers in its 14-state local service area.