Fitch Places CenturyTel's Ratings on Watch Negative; Qwest's Ratings on Watch Positive

CHICAGO--(Business Wire)--
Fitch Ratings has placed the Issuer Default Ratings (IDRs) of CenturyTel, Inc.
(CenturyTel) and Embarq Corporation (Embarq) on Rating Watch Negative.
Simultaneously, Fitch has placed the IDRs of Qwest Communications International,
Inc. (Qwest) and its subsidiaries on Rating Watch Positive. Certain security
ratings of Qwest Corporation, Embarq, Embarq local telephone subsidiaries, and
the senior secured credit facility at Qwest were affirmed with a Stable Outlook.
Other actions pertaining to certain security classes are outlined at the end of
this release.

The action reflects the proposed merger of CenturyTel (which does business as
CenturyLink) and Qwest in an all stock transaction, as announced on April 22,
2010. The terms of the transaction call for CenturyTel to exchange 0.1664 shares
of common stock for each outstanding share of Qwest, and represents a 15%
premium over Qwest's closing stock price on April 21, 2010. The enterprise value
of the transaction is approximately $22.4 billion, including the assumption of
$11.8 billion of Qwest net debt outstanding as of Dec. 31, 2009. Fitch estimates
the transaction multiple is approximately 5.0 times (x) based on Qwest's 2009
EBITDA before synergies, and 4.5x after synergies. CenturyTel estimates
operating cost synergies approximating $575 million will be realized over a
three to five year time period. Following the merger, CenturyTel's shareholders
will own slightly over 50% of the company following the merger and four Qwest
directors will join CenturyTel's existing board of directors. The transaction is
expected to close in the first half of 2011, following the customary regulatory
and shareholder approvals.

In evaluating the final ratings, Fitch will take into account the proposed
synergies and integration costs incorporated into the transaction, the outcome
of the regulatory approval process, expectations for the merged company's future
financial performance and the underlying operating environment as it affects the
company's wireline-based business. Pro forma 2009 net leverage for the two
companies, excluding synergies, was relatively strong at approximately 2.4x.
However, through the acquisition of Qwest (and as a key rating factor embodied
in Qwest's current 'BB' IDRs), CenturyTel's service territory will take on an
increasing urban character, and will thus be exposed to more intense competitive
forces and higher levels of technology substitution.

CenturyTel's total debt was $7.754 billion at Dec. 31, 2009, an amount that
included $500 million of maturing long-term debt. In addition, CenturyTel's
balance sheet reflected approximately $162 million in cash and cash equivalents.
Financial flexibility is provided through two revolving credit facilities: a
$728 million revolving credit facility that matures in December 2011 at
CenturyTel, which had approximately $291 million outstanding on Dec. 31, 2009,
and an $800 million undrawn revolving credit facility due in May 2011 at Embarq.
The principal financial covenants in CenturyTel's credit facility limit debt to
EBITDA for the past four quarters to no more than 4.0x and EBITDA to interest
plus preferred dividends (with the terms as defined in the agreement) to no less
than 1.5x. The primary financial covenant in the Embarq facility limits its
leverage to 3.25x. Fitch expects CenturyTel to put in place a new revolving
credit facility at the close of the merger.

In Fitch's view, CenturyTel is expected to have the financial flexibility to
manage upcoming maturities due to its free cash flow and credit facilities. In
2010, $500 million in debt matures and is expected to be retired from free cash
flow and a modest level of borrowing on the revolver. In 2011, debt maturities
total $303 million (including the $291 million on CenturyTel's credit facility).

Qwest had $14.2 billion in debt outstanding and approximately $2.4 billion in
cash on Dec. 31, 2009. Qwest's leverage was somewhat elevated due to two note
issuances during 2009, totaling approximately $1.4 billion, the proceeds from
which are expected to refinance 2010 scheduled maturities. In 2010, Qwest's
remaining maturities include approximately $65 million of maturities at Qwest
Capital Funding, Qwest Corporation's $500 million term loan, and Qwest
Communications International's $1.265 billion of senior unsecured convertible
notes due in 2025 which can be put to the company in November 2010. In 2011, a
total of approximately $1 billion in debt matures. Qwest's $1.035 billion senior
secured revolver is scheduled to mature in September 2013; however, the facility
has a change of control provision and is thus expected to be terminated upon the
completion of the merger. The primary financial covenant in the amended facility
limits Qwest's leverage to no more than 5.0x and Qwest Corporation's leverage to
no more than 2.5x.

Fitch believes CenturyTel will have adequate financial flexibility after the
close of the merger to manage upcoming maturities owing to the new credit
facility to be put into place, and anticipated annual free cash flow
approximating $1.4 billion.

The CenturyTel ratings placed on Rating Watch Negative are as follows:

CenturyTel

--Long-term Issuer Default Rating (IDR) 'BBB-';

--Senior unsecured revolving credit facility 'BBB-';

--Senior unsecured debt 'BBB-';

--Short-term IDR 'F3';

--Commercial paper 'F3'.

Embarq

--Long-term IDR 'BBB-'.

Carolina Telephone & Telegraph (CT&T)

--IDR 'BBB-'.

Embarq - Florida, Inc. (EFL)

--IDR 'BBB-'.

Ratings affirmed with a Stable Outlook are as follows:

Embarq

--Senior unsecured notes at 'BBB-';

--Bank facility at 'BBB-'.

Carolina Telephone & Telegraph (CT&T)

--Debentures at 'BBB-'.

Embarq - Florida, Inc. (EFL)

--First mortgage bonds at 'BBB'.

The Qwest ratings placed on Rating Watch Positive are as follows:

Qwest Communications International, Inc.

--IDR 'BB';

--Senior unsecured notes (guaranteed by QSC) 'BB+';

--Senior convertible senior notes 'BB'.

Qwest Corporation

--IDR 'BB'.

Qwest Services Corporation

--IDR 'BB'.

Qwest Capital Funding

--IDR 'BB';

--Senior unsecured notes 'BB'.

The Qwest ratings affirmed with a Stable Outlook are as follows:

Qwest Communications International, Inc.

--Senior secured credit facility at 'BBB-'.

Qwest Corporation

--Senior term loan at 'BBB-';

--Senior unsecured notes at 'BBB-'.

The rating reflects the application of Fitch's current criteria which are
available at 'www.fitchratings.com' and specifically include the following
reports:

--'Corporate Rating Methodology' (Nov. 24, 2009);

--'Liquidity Considerations for Corporate Issuers' (June 12, 2007).

Additional information is available at 'www.fitchratings.com'.

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AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF
CONDUCT' SECTION OF THIS SITE.

Fitch Ratings
John Culver, CFA, +1-312-368-3216, Chicago
David Peterson, +1-312-368-3177, Chicago
Media Relations:
Cindy Stoller, +1-212-908-0526, New York
cindy.stoller@fitchratings.com

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