Embarq CEO says well positioned for acquisitions

By Ritsuko Ando

NEW YORK (Reuters) - Rural telecommunications carrier Embarq Corp. (EQ.N: Quote, Profile, Research, Stock Buzz) sees the sector on the verge of consolidation and believes the company is well-positioned to be an acquirer in the future, its chief executive said on Friday.

Embarq CEO Daniel Hesse said buying an additional rural phone carrier would help it slash costs, although he did not yet see specific deals in which such benefits outweighed premiums it would likely have to pay.

"Today you have roughly 800 local exchange carriers in the U.S., and we're competing with much larger competitors -- the wireless companies, the cable companies," Hesse told Reuters in an interview.

"We're very well positioned to be an acquirer," he said. "But in today's market, a lot of the prices are too high. And we have a very disciplined approach to looking at acquisitions."

Embarq was spun off last year from Sprint Nextel Corp. (S.N: Quote, Profile, Research, Stock Buzz), which now focuses on wireless service. Embarq shares have risen over 20 percent since a May 2006 market debut.

Hesse, who was CEO of AT&T Wireless Services from 1997 to 2000, said further gains in the stock could help a deal.

"The stock has moved up a lot in the past year, not only in absolute terms but relative to the industry. If we continue to perform that well, then all of a sudden our equity can become a currency," he said.

Embarq offers local and long-distance phone services as well as high-speed Internet access in 18 states. It and other phone carriers face increasing competition from cable and wireless companies.