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Microsoft Invests $200M in Qwest

December 14, 1998

REDMOND, Wash. (AP) _ Microsoft Corp. will invest $200 million in upstart Qwest Communications International Inc., in an alliance designed to provide Internet-based services to businesses.

The investment, at $45 per Qwest share, buys Microsoft, the Redmond, Wash.-based software giant, about 1.3 percent of Qwest, which is building a fiber-optic network that will span 18,500 miles once completed in mid-1999. The deal also allows Qwest to cut the time to market its business services by up to 12 months, aided by software licensed from Microsoft, the companies said today.

Qwest, based in Denver, expects the new venture to generate about $150 million in revenue during the first two years, most of it in 2000, Dow Jones News Service reported. Qwest, which has 12-month revenue of $1.58 billion, will create a new unit for the venture in January, and expects to begin operations in the second quarter of 1999.

Qwest’s network uses newer Internet-based technology that can handle far larger quantities of telecom traffic than can older telephone networks. The alliance will offer electronic commerce and Web-hosting services, which stockpiles customers’ servers in holding areas, providing maintenance, protection against intruders, high-speed network connections and other services.

Prior to the deal, Qwest had about 333 million shares outstanding.

In morning trading, shares of Qwest were at $44.25, up 2 percent or 87.5 cents, on the Nasdaq Stock Market.

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