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Qwest Shareholders Question Leadership

April 4, 2002

DENVER (AP) _ Concerns about Qwest Communications International’s accounting methods and business practices is causing shareholders and analysts to question whether the company needs a change in leadership.

Often, said Howard Rickman, chairman of a group of Qwest retirees in Oregon and Washington, the first thing he’s asked is why the company’s chief executive, Joe Nacchio, still has a job.

``I attend three to four meetings with retirees every month and at every single meeting I get the question ’Why is Nacchio still there,″ he told The Associated Press.

Investors and analysts alike say Nacchio is an intelligent leader who knows the telecom industry. Still, they don’t mind saying that a change could do the company some good.

Denver-based Qwest is being investigated by the Securities and Exchange Commission in regard to its accounting methods, which some analysts have decribed as ``aggressive.″

This week, Qwest said the SEC plans to recommend action against it for failing to include official GAAP results with pro forma results it reported for the fourth quarter 2000.

Analyst Patrick Comack of Guzman & Co. said Qwest may have to restate earnings. He said he also was troubled by a purchase of dark fiber from the now bankrupt Enron Corp. last fall.

``Some investors view this as a dishonest company, and the only way to remedy that is by a change in leadership,″ Comack said.

Attempts to reach members of Qwest’s board of directors Wednesday were unsuccessful. But last fall, the board extended Nacchio’s contract through 2005, Qwest spokesman Chris Hardman said.

Drake Johnstone of Davenport & Co. said if Qwest had recognized one-time capacity sales over the life of contracts instead of upfront, revenues would have been lower, and Qwest would have likely violated its bank covenants.

Those covenants were renegotiated this year.

``Given the company’s behavior in the past few years and the manipulation of results, I have a hard time trusting what the company says,″ said Johnstone.

Hardman said both analysts have been critical of Qwest in the past.

``We’re not surprised by their comments, but at the same time, we certainly disagree with them,″ Hardman said.

``We believe we have the right management team to lead the company, and that management team has created one of the most unique blend of assets in the industry that will help our company in the future.″

Shares of Qwest were down 8 cents to close at $7.55 in trading Wednesday on the New York Stock Exchange.

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On the Net:

http://www.qwest.com

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