updated 8/3/2004 9:31:41 AM ET 2004-08-03T13:31:41

Qwest Communications International Inc. said Tuesday its second-quarter loss widened from year-ago levels, mostly due to an array of charges totaling $487 million.

The Denver-based telecommunications company reported a loss of $776 million, or 43 cents a share, for the period ended June 30, compared with a loss of $64 million, or 4 cents a share, in the same period last year.

Among the charges for the period were $300 million, or 17 cents a share, for higher litigation reserves; a tax charge of $140 million, or 8 cents a share; and a charge of $127 million, or 7 cents a share, to pay for workforce reductions.

Excluding items, the company’s earnings came in just below analysts’ expectations of a loss of 13 cents a share. Revenue declined 4.3 percent to $3.44 billion in the quarter from $3.6 billion in the prior-year period.

For the first six months of the year, Qwest swung to a loss of $1 billion from a profit of $88 million last year. First-half revenue dropped to $6.9 billion from $7.2 billion.

Qwest said it benefited from strong momentum in its long-distance, digital subscriber lines, or DSL, wireless operations and bundled services in the second quarter.

However, heightened competitive pressures in the enterprise market and a continuing, but stabilizing, access-line loss more than offset those gains.

The company added 109,000 DSL subscribers in the second quarter, giving it a total of 853,000 DSL subscribers. The company is on track to have 1 million DSL subscribers by year-end and expects to have DSL services available to about 65 percent of households within its operating region.

Qwest added 733,000 in-region long-distance lines in the second quarter, giving it 4.1 million total lines.

The company said it overstated the number of long-distance lines in the fourth quarter by about 133,000 lines. As a result, the total line count was 2.2 million in the fourth quarter and 3.4 million in the first quarter. This change didn’t affect revenue.

Qwest said it remains on track to complete the rollout of its voice over Internet protocol to all major metropolitan markets within its local service area, as well as to businesses in certain out-of-market areas, by the end of the year.

The company also said it is still on track to close the sale of its PCS licenses and related wireless network assets to Verizon Wireless by year’s end or early 2005. The $418 million cash deal is subject to regulatory approval.

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