UPDATE 4-Qwest profit beats Street view, shares rise

* Q4 EPS $0.12 vs Street view $0.10, excl. charges

* Q4 rev $3.3 bln in line with Wall Street view

* 1,700 job cuts in Q4

* Shares rise as much as 7 percent to $3.64
(Adds analyst comment, details; updates share movement)

By Sinead Carew

NEW YORK, Feb 10 (Reuters) - Qwest Communications
International Inc (Q.N) posted a smaller quarterly profit but
beat Wall Street expectations as the telephone company saved
money from cutting about 5 percent of its workforce in the
quarter, sending its shares up as much as 7 percent.

Qwest, which has struggled with customers disconnecting
home phones in favor of cable rivals or wireless services, said
on Tuesday that a decline in voice services offset higher
revenue from data services.

While it lost slightly more customers than analysts had
expected, Qwest beat profit estimates by cutting jobs more
quickly than it had planned in the quarter.

"The margins were a little better in the quarter," said
Stifel Nicolaus analyst Chris King. Qwest's 35.6 percent
adjusted profit margin for earnings before interest, tax
depreciation and amortization (EBITDA) was better than King's
expectation for a margin of about 34 percent.

Qwest had said it cut 1,700 jobs in the quarter instead of
1,200 as announced in October. It ended the quarter with almost
33,000 workers.

The company told analysts on a conference call that it was
seeing some business customers delaying their decisions to sign
up for new services and that this could start to hurt revenue
in the second quarter if it continues.

But given the current economy, King said he was pleasantly
surprised that Qwest did not expect to be hurt by slowing
enterprise spending sooner than the second quarter.

"It almost certainly will (hurt Qwest) but the fact they
were able to do as well as they were able to do in the fourth
quarter in that business is a positive," he said.

Qwest said on Tuesday that it earned a profit of $185
million, or 11 cents per share, compared with a profit of $366
million, or 20 cents a share, in the year-ago quarter.

The latest quarter included a severance charge of 1 cent
per share and reflects an increase in income tax from the
year-earlier quarter.

Excluding the charge, Qwest earnings would have been 12
cents, compared with the average analyst estimate of 10 cents
per share, according to Reuters Estimates.

Revenue fell 3 percent to $3.3 billion, matching the
average analyst estimate, according to Reuters Estimates.

DEBT REPAYMENT

Despite the continued impact of unemployment and a weak
housing market on consumer services, Chief Executive Edward
Mueller said in an interview that Qwest had performed well.

"I'd say we had a heck of a quarter," he said.

Chief Financial Officer Tom Euteneuer said Qwest, which has
$560 million debt maturing in 2009 and another roughly $2.2
billion due in 2010, may be able to refinance or pay back debts
due this year and next year quicker than expected due to
improvements in credit markets since the fourth quarter.

"We have some runway to go back out there," he said in an
interview. "We would look at all of our options."

However, King noted that debt markets were changing so much
from day to day that it was too soon for investors to be sure
of this prospect.

Qwest forecast 2009 adjusted free cash flow of $1.4 billion
to $1.5 billion compared with $1.44 billion for 2008.

It forecast 2009 adjusted EBITDA of $4.2 billion to $4.4
billion, including an increase in noncash pension expenses.

King said Qwest's forecast meant that profits excluding
pension expenses would essentially stay flat with 2008,
indicating strong expense management.

"The guidance is reasonable. It's not a growth company. The
cost cutting does look good from that standpoint," he said.

Qwest forecast 2009 capital spending of $1.8 billion.

The company said it would not make any cash contributions
to its pension plan in 2009 but said its pension funding
requirement for 2010 could be as high as $300 million.

Access lines fell to 11.6 million in the fourth quarter
from 12.8 million in the year-ago quarter.

The company said it sees 2009 line losses similar to 2008
as it increasingly pushes advanced services such as broadband
Internet access to help stem subscriber losses.

Qwest shares rose 12 cents, or more than 3 percent, to
$3.49 at mid-afternoon on the New York Stock Exchange. Their
earlier gains were scaled back as the general market declined.
(Reporting by Sinead Carew; Editing by Derek Caney, Matthew
Lewis, Richard Chang)