Qwest Communications International (Q)

Financial Results

For the full year, Qwest reported revenue of $13.8 billion.  After taking into account revenue from a large equipment contract in 2006 and the de-emphasis of the dial business in 2007, full-year revenue was essentially flat compared to the prior year.

Qwest’s total fourth-quarter revenue of $3.4 billion reflected continued positive trends in strategic products. Fourth-quarter revenue declined 1.5 percent year over year and was flat sequentially.  Total data, Internet and video revenue — which now represents 39 percent of Qwest’s total revenue — grew 8.7 percent year over year.

Business revenue grew slightly on an adjusted basis described above, for the full year as data, Internet and video revenue growth offset declines in local and long-distance revenue.  Fourth-quarter Business revenues increased 2.6 percent year over year and increased sequentially for the third consecutive quarter. MPLS-based products continue to outpace declines in legacy data platforms as customers migrate to value-enhancing IP solutions. Strategic products continue to reshape the channel, growing 29 percent in the fourth quarter year over year, and now representing 27 percent of total business revenues.

Full-year Mass Markets revenue grew by 1.1 percent, driven by growth in consumer ARPU, bundle penetration and increased take-rates for higher broadband speeds, which offset the impact of access-line losses. Mass Markets fourth-quarter revenue remained stable year over year and declined 1 percent sequentially.

Wholesale revenue declined 4.5 percent for the full year as industry consolidation moved carrier traffic off the network and as reduced demand for access lines contributed to lower access and local revenue.  Increases in data traffic, demonstrated by our 5.6 percent increase in Wholesale data revenue for the full year, continue to moderate consolidation impacts as Qwest continues its focus on profitable growth.  For the quarter, Wholesale revenue declined 9.2 percent over 2006 and 2.3 percent sequentially.

“Our consistent practice of financial discipline, combined with our drive to create profitable growth, is clearly reflected in our results from 2007,” said John W. Richardson, Qwest executive vice president and CFO.  “We are pleased to report significant improvement in free cash flow for the year, as well as growing our EBITDA margins towards our goal of mid-30 percent.”

Qwest’s operating expenses totaled $12.0 billion for the year including $393 million in litigation charges.  After adjusting for litigation charges, operating expenses were down $739 million, or 6.0 percent, from 2006. Improvements in productivity, reductions in benefit and pension expenses, lower depreciation and amortization and savings in facility costs drove the decline. Fourth-quarter operating expenses declined $192 million, or 6.2 percent, year over year through lower facility costs and a non-recurring compensation-related charge in 2006.

2

Financial Results

Operating revenue of $3.4 billion in the quarter reflected growth in the mass markets channel, stable business revenue with improving trends, and pressure largely coming from declines in the wholesale channel. Data, Internet and video services revenue of $1.3 billion grew to 37 percent of operating revenue and increased by 10 percent over year-ago levels. Data, Internet and video revenues were supported by sequential and year-over-year growth in the mass markets, business and wholesale sales channels. Highlighting this growth are continued strong trends in strategic products such as Broadband and video, as well as developing technology products such as metro Ethernet, integrated access, MPLS-based products and hosting.

Mass markets revenue grew by 1.5 percent year over year. By continuing to provide consumers and small businesses with excellent customer service and products tailored to their needs, Qwest has been able to grow mass market revenue and increase consumer ARPU through bundles of voice, broadband, video and wireless products, beyond the impact of access-line declines.

Business revenue increased modestly from the prior quarter and is down slightly from the year-ago quarter with strategic products currently representing more than 24 percent of business revenues, up from 20 percent a year ago. Revenue growth from MPLS-based products continues to outpace declines in older technologies such as ATM and Frame Relay. In the quarter, Qwest’s sales trends for recurring revenue streams and growth products such as iQ continued to highlight its opportunity for business growth.

Wholesale revenue declined 3.9 percent from the prior quarter. Long-distance and access revenue was impacted by consistent carrier volume declines from industry consolidation and the aggregate unfavorable impact of one-time customer events in both periods. Growth in more profitable reseller volume and data products was not able to offset declines in the period due in part to the longer provisioning times of these products.

Qwest’s operating expenses totaled $3.3 billion for the quarter, including charges of $353 million for litigation. After adjusting for these charges, third quarter operating expenses declined $185 million, or 6.0 percent year over year, and were down 0.9 percent from the previous quarter. Productivity initiatives continue to generate meaningful reductions in facility and employee-related costs.  These combined costs were down nearly 1 percent sequentially and more than 6 percent from the prior year.

Qwest’s adjusted EBITDA was stable at $1.151 billion in the third quarter compared to $1.149 billion in the second quarter and up from $1.134 billion in the year-ago third quarter.

“Steadily improving net income and adjusted free cash flow supported recognition of the value of our tax asset and are a testament to the financial discipline we have come to represent,” said John W. Richardson, Qwest executive vice president and CFO. “Our ongoing discipline and focus on revenue and cost initiatives should continue to turn positive trends into positive results.”

2

Financial Results

Operating revenue for the second quarter 2007 was $3.5 billion, with a modest increase over the prior quarter. Data and Internet services revenue of $1.2 billion is now 36 percent of operating revenue. Combined data, Internet and video revenue increased by 11 percent year over year, driven by sequential and year-over-year growth in the mass markets, business and wholesale sales channels. Qwest generated continued strength in strategic products. Consumer broadband, and video showed solid subscriber growth, and business developing technology products such as metro Ethernet, integrated access, MPLS-based products and hosting all maintained strong growth trends.

Mass markets growth continued and resulted in revenue expansion of 1.4 percent year over year. Customer retention initiatives, ARPU and bundle growth, as well as customer service excellence, overcame access-line loss pressures in the traditionally soft second quarter.

Enterprise growth products currently represent more than 22 percent of business revenues, up from 18 percent a year ago and less than 14 percent two years ago. Overall business revenue increased slightly from the previous quarter and was flat with the prior year after adjusting for the company’s de-emphasis of the low-margin dial access product.

Qwest is seeing encouraging sales trends in its business channel. In the quarter, it achieved sales milestones with the best single recurring revenue sales month for the channel in the past 30 months, and the best sales month on record for the MPLS-based integrated service product sold as iQ NetworkingTM.

Wholesale revenue was down less than 1 percent year over year as carrier volume declines from industry consolidation were replaced nearly entirely with more profitable reseller volume and growth in data products. Approximately 10 percent growth in data revenue reflected continued success within this product suite.

Qwest’s operating expenses totaled $2.9 billion for the quarter. Second quarter operating expenses declined $127 million, or 4.2 percent year over year, and were flat with the previous quarter. There were approximately $8 million in severance and realignment charges in the quarter as Qwest continued to right-size its workforce in response to productivity improvements. In addition, spending in the quarter of approximately $10 million on additional business sales force and business marketing offset continued sequential productivity gains. This incremental investment in the quarter was directed to further capture revenue opportunities in the business market.  Lower volumes and improvements in productivity and operating efficiencies were reflected in a $24 million sequential decline in facility costs compared to the first quarter.

Qwest’s EBITDA increased to $1.149 billion in the second quarter from $1.131 billion in the first quarter and $1.109 billion in the year-ago second quarter.

“We are pleased with our steady progress during the first half of 2007,” said John W. Richardson, Qwest executive vice president and CFO. “Our financial discipline and focus on profitable growth drove significant year-over-year improvement in net income and free cash flow, and we are on track to meet our financial objectives for the year.”

2

Net income for the quarter improved to $246 million, a 110 percent increase from the year-ago quarter when net income was $117 million and a 3 percent improvement sequentially. Included in second quarter net income is a $22 million charge related to the company’s early retirement of debt.

Financial Results

Operating revenue for the first quarter 2007 was $3.4 billion, including data and Internet services revenue of $1.2 billion, now more than 35 percent of operating revenue. Combined data, Internet and video revenue increased by 11 percent year over year, maintained by continued strength in mass markets and business growth products such as high-speed Internet and managed services. Total revenue absorbed the de-emphasis of lower return products including dial access as well as the impact of regulatory fees and settlements, and revenue reduction from a large data equipment contract last year. Excluding the impact of these items, revenue grew modestly.

Mass markets growth continued as customer retention initiatives, ARPU and bundle growth, as well as customer service excellence overcame access-line loss pressures. Revenue grew 1.3 percent year over year while absorbing $6 million in non-recurring revenue credits associated with the settlement of a regulatory action and $17 million related to flow-through universal service charges.

Enterprise growth products currently represent more than 20 percent of business revenues and are growing at nearly 30 percent on an annualized basis. Overall business revenue declined 4.0 percent year over year; however, after taking into account revenue from a large data equipment contract last year and our de-emphasis of the dial access business totaling $52 million, revenue in this channel improved 1.0 percent.

Wholesale revenue was flat with the prior year as more than 10 percent growth in data revenue largely offset access-line and volume-driven declines in local and access revenues. In long-distance revenue, strategic price increases to certain countries and for certain domestic voice products helped support margin improvements even as voice traffic declined.

Qwest’s operating expenses totaled $2.9 billion for the quarter, including a $40 million charge in Selling, General and Administrative expense related to securities litigation.  First quarter operating expenses declined $195 million, or 6.2 percent year over year, and $176 million from the previous quarter when expenses were negatively impacted by heavy storms in the West and Pacific Northwest, among other factors. Improvements in productivity and operating efficiencies and lower facility costs drove the decline along with the expected decrease in annual benefit expenses. These improvements, along with new relief from regulatory restrictions and peer merger concessions announced during the quarter, provide opportunity for further expense reductions.

Qwest’s EBITDA increased to $1.131 billion in the quarter from $1.08 billion in the fourth quarter and $1.045 billion in the year-ago quarter. First quarter EBITDA includes the $40 million charge related to securities litigation.

“We made solid progress in the first quarter toward our margin and cash flow goals for the year,” said John W. Richardson, Qwest executive vice president and CFO. “Execution against our initiatives allows us to continue to achieve our objectives of

2

expanded margins, continued growth in profitability and shareholder rewards through steady advance on our share repurchase program.”

Net income for the quarter improved to $240 million, a 173 percent increase from the year-ago quarter when net income was $88 million and a 24 percent improvement sequentially.

Based on the first quarter results Qwest continues to be comfortable with our previously stated goals for revenue, EBITDA, capital expenditures and free cash flow.

Financial Results

Qwest reported revenue of $3.5 billion for the fourth quarter and $13.9 billion for the year, benefiting from growth in data and Internet services across all sales channels. Qwest’s growth products and services are a meaningful part of the portfolio and continue to expand rapidly. High-speed Internet, data, wireless and long distance services contributed more than 55 percent of revenue in the fourth quarter of 2006 and revenue increased 8 percent over the prior year quarter.

Mass markets posted another quarter of growth as the channel’s initiatives directed toward customer retention, increased bundle penetration and ARPU improvements more than offset access line loss pressures. Mass market revenues in the quarter grew 1.5 percent compared to the year ago quarter, even with $8 million in nonrecurring revenue reduction associated with settlement-related customer credits in New Mexico and Oregon, as well as the impact of further reductions in universal service rates. For the year, mass markets revenues grew 2.4 percent — more than twice the rate of growth in 2005.

Wholesale continues to successfully implement its strategy of profitable growth. Wholesale revenues held flat as growth in data revenue essentially offset continued and anticipated pressures in long distance and the local market.

Business quarterly revenues held essentially flat compared to the prior year and sequentially as growth in key data products and services continue to offset migration of customers off our legacy products. Enterprise growth products continue to gain traction and now represent over 21 percent of business revenues growing at over 30 percent on an annualized basis.

“We delivered on our objectives for the year,” said Oren G. Shaffer, Qwest vice chairman and CFO. “Margins expanded toward our target of the mid-30 percent range, free cash flow grew significantly, sustainable profitability was achieved and shareholders were rewarded through our share repurchase program.”

Qwest’s operating expenses totaled $12.4 billion for the year, a savings of $680 million, or 5.2 percent, from 2005. Improvements in productivity and operating efficiencies and lower facility costs drove the decline. Fourth quarter operating expenses declined $156 million, or 4.8 percent, over the fourth quarter of 2005, driven by lower facility costs, depreciation expense and realignment costs.  Fourth quarter expenses were also negatively impacted by the effects of heavy storms in the West and Pacific Northwest.

Qwest’s adjusted EBITDA margins for the year were 31.5 percent compared to 29.0 percent for 2005. Consistent with the company’s objective of continued margin expansion to the mid 30 percent level, the fourth quarter marked the tenth consecutive quarter of year-over-year margin expansion.

Net income for the quarter improved to $194 million and included a gain on the sale of real estate of $61 million. By comparison, in the year-ago quarter the company posted a

loss of $528 million, which include a charge of $430 million related to debt extinguishment.

For the year, Qwest reported net income of $593 million, which included gains of $156 million for one-time non-operating items. This compared with a loss of $779 million in 2005, which included a net charge of $199 million for one-time non-operating items.

Financial Results

Qwest reported revenue of $3.5 billion for the third quarter, benefiting from improving sales within Qwest’s diverse portfolio of growth products, including high-speed Internet, advanced data products and digital voice service. Year-ago revenues included the impact of $52 million recognized in the third quarter of 2005 from a large government contract.

“We continue to deliver on our expectations for the year,” said Oren G. Shaffer, Qwest vice chairman and CFO. “Our margins continue to expand toward our target of the mid-30 percent range, our free cash flow is squarely on track for the year, and we continue to pursue additional opportunities to expand top-line growth.”

Qwest’s operating expenses declined 6.3 percent to $3.1 billion for the third quarter of 2006, compared to the third quarter of 2005, as a result of improvements in productivity and operating efficiencies, lower facility costs and lower depreciation. Operating expense in the third quarter of 2006 included $43 million of severance charges as productivity improvements outpaced normal attrition levels.

Qwest’s adjusted EBITDA margins increased to 32.5 percent in the third quarter, excluding severance charges, marking the ninth consecutive quarter of year-over-year margin expansion. This represents a 390 basis point improvement from the third quarter a year ago, after adjusting for $26 million of real estate realignment in the year ago quarter, and up 60 basis points sequentially.

Net income for the quarter improved to $194 million from a loss of $144 million in the year-ago quarter. The current quarter includes a benefit of $92 million from a tax-sharing settlement and a severance charge of $43 million.

Financial Results

Qwest reported revenue of $3.5 billion for the second quarter, benefiting from improving sales within Qwest’s diverse portfolio of growth products, including high-speed Internet, advanced data products, long distance and wireless.

“The second quarter continues to illustrate that we are delivering on goals and meeting expectations,” said Oren G. Shaffer, Qwest vice chairman and CFO.  “Our free cash flow is on track for the year, our margins continue to widen toward our target of the mid-30

(a) See attachment E for Non GAAP Reconciliation

Financial Results

Qwest’s first quarter revenue of $3.5 billion increased 0.8 percent compared to the first quarter a year ago. Revenue trends improved as a result of strong sales within Qwest’s portfolio of mass market bundles and growth products, including high-speed Internet, advanced data products, long distance and wireless.

(a) See attachment F for Non GAAP Reconciliation

Financial Results

Qwest’s fourth quarter revenue of $3.5 billion increased 1.3 percent, compared to $3.4 billion in the fourth quarter a year ago.  This represents the third consecutive quarter of year-over-year improved revenues, driven by increases in mass markets and business revenues, which includes $15 million in revenue from a large government contract.  For the full year, revenue was $13.9 billion compared to $13.8 billion for 2004.   This marks the first year of improved revenue since 2001.

Revenue trends improved as a result of strong sales within Qwest’s portfolio of growth products, including high-speed Internet, advanced data products, long-distance, and wireless, as well as bundles. Qwest’s growth businesses – high-speed Internet, data, wireless and long-distance services – contributed over 50 percent of revenue in the quarter compared with 45 percent two years ago.

Qwest’s 2005 operating expenses totaled $13.0 billion, a decline of $1.0 billion or 7.4 percent. The company continued to benefit from improvements in productivity and operating efficiencies, as well as optimization initiatives.  The prior year includes expense associated with reserves for legal settlements of $550 million.

Fourth quarter operating expenses totaled $3.3 billion, a decline of 1 percent compared to the fourth quarter of 2004.  The company continued to benefit from improvements in productivity and operating efficiencies, as well as wireline facilities cost reductions.

“The company is showing strong momentum as we enter 2006,” said Oren G. Shaffer, Qwest vice chairman and CFO.  “That, coupled with the elimination of the high-coupon legacy debt in the fourth quarter, has advanced us to break-even earnings per share, before special items, and put us on a path to profitability.”

Financial Results

Qwest reported third quarter revenue of $3.5 billion, compared to $3.47 billion in the second quarter and $3.45 billion in the third quarter a year ago.  This represents the sixth consecutive quarter of stable revenues, as well as continued year-over-year growth in mass markets and business revenues.  Business revenue benefited from the recognition of revenue on a large government contract of approximately $52 million in the quarter.  Revenue trends improved as a result of strong sales within Qwest’s portfolio of growth products, including high-speed Internet, advanced data products, long-distance, as well as bundles.

“Our significant progress in productivity continues to drive cost reductions and steady margin improvement,” said Oren G. Shaffer, Qwest vice chairman and CFO.  “We continue to improve our free cash flow, putting us on track to meet our goal for 2005 and for further free cash flow growth in 2006. “

Qwest’s third quarter operating expenses totaled $3.3 billion, a decline of 9 percent or $326 million compared to the third quarter of 2004.  Cost of sales declined $36 million in the third quarter compared with the third quarter of last year.  The decrease was driven by continued improvement in productivity and operating efficiency, and by the reduction in fixed and variable costs as a result of our facilities cost initiatives, partially offset by increases in costs associated with a large government contract and wireless usage-based minutes.

Selling, general and administrative (SG&A) expenses decreased $245 million from the same period in 2004.  Third quarter 2005 results included $26 million in restructuring, realignment, and severance charges.  Third quarter 2004 results included special items, the majority of which was a legal reserve of $250 million.  See special items in the Attachment E.  SG&A benefited from further productivity improvements and continued cost-containment efforts.

Financial Results

        Qwest reported second quarter revenue of $3.47 billion compared to $3.45 billion in the first quarter and $3.44 billion in the second quarter a year ago. This represents the fifth consecutive quarter of stable revenues, as well as year-over-year growth in mass markets and business revenues. Wireline revenues benefited from an improvement in business local, data and Internet revenues, mass markets

growth products such as long-distance and high-speed Internet, as well as wholesale settlements. Qwest's wireless revenues grew 4.8 percent sequentially to $130 million and 1.6 percent compared with the second quarter of the prior year.

        "Improved operating results are driving meaningful expansion in free cash flow." said Oren G. Shaffer, Qwest vice chairman and CFO. "Our ongoing improvement in cash flow generation, coupled with our recent financing transactions, advances us in our goal to reduce debt and invest in growth."

        Qwest's second quarter operating expenses totaled $3.2 billion, a decline of 15 percent or $555 million compared to the second quarter of 2004. Cost of sales declined $52 million in the second quarter compared with the second quarter of last year. The decrease was driven by continued improvement in productivity and operating efficiency, and the reduction of fixed and variable costs as a result of our facilities cost optimization initiatives, partially offset by an increase in wireless usage-based minutes.

        Selling, general and administrative (SG&A) expenses decreased $441 million for the same period. Second quarter 2004 results included $393 million in special items. In addition, SG&A benefited from further productivity improvements and continued cost-containment efforts.

        Revenue less cost of sales and SG&A for the second quarter totaled $991 million compared with $470 million for the second quarter of 2004, including special items.

Financial Results

        Qwest's reported revenue of $3.45 billion for the quarter, representing the fourth consecutive quarter of stable revenues despite competitive pressures. Sequentially, revenues were helped by gains in key growth areas including long-distance and DSL. The company further benefited from strategic price initiatives in key product categories including consumer long distance, packages and wholesale long distance.

        "Our ability to stabilize revenues as well as our continued diligence on cost containment and optimization has resulted in meaningful margin expansion. EBITDA margins increased to more than

28 percent compared with 25 percent a year ago," said Oren G. Shaffer, Qwest vice chairman and CFO. "We continue to improve our competitive position, performance and financial flexibility."

        Qwest's first quarter operating expenses totaled $3.2 billion, a decline of four percent or $136 million compared to the first quarter of 2004. Cost of sales declined $15 million in the first quarter compared with the first quarter of last year. The decrease was driven by continued improvement in employee cost savings and the reduction of fixed and variable costs as result of our facilities cost optimization initiatives, partially offset by an increase in wireless usage-based minutes and an increase in long-distance minutes. Selling, general and administrative (SG&A) expenses decreased $118 million for the same period, primarily as a result of workforce rebalancing, productivity improvements and continued cost containment efforts.

        Revenue less cost of sales and SG&A for the first quarter totaled $974 million compared with $873 million for the first quarter 2004, including restructuring and severance charges of $15 million in both periods.

Financial Results

        Qwest's revenue was $3.4 billion in the quarter, a 0.3 percent decline sequentially and a 1.7 percent decrease from fourth quarter 2003—the lowest year-over-year decline in the past eight

quarters. Revenue sequentially benefited from improved trends in consumer local access line losses and solid gains in key growth areas, including long- distance and DSL, as well as further package and bundle penetration. Fourth quarter revenue benefits were offset by continued competitive pressures in the enterprise market and lower wireless revenues associated with the churn from the customer migration program.

        For the full year, revenue was $13.8 billion compared to $14.3 billion for 2003, or a decline of 3.4 percent. Revenue gains in consumer and wholesale long-distance, data and Internet were offset by local losses and competitive pressures in the enterprise market.

        "Our ability to improve revenue trends and to further reduce costs enabled Qwest to achieve its goal of improving margins during 2004," said Oren G. Shaffer, Qwest vice chairman and CFO. "We believe we have the opportunity to increase efficiency and further reduce costs. Along with targeted capital investments, these efforts should generate ongoing improvements in margins and free cash flow in 2005."

        The company further reduced operating costs through continued expense management and ongoing productivity initiatives. During 2004, Qwest reduced its total workforce by approximately 5,500, or 12 percent, with the majority of the reduction in the second half of the year.

        Qwest's fourth quarter operating expenses totaled $3.3 billion, compared to $3.6 billion in the fourth quarter of 2003, a decline of 8 percent, with both periods including year-end accrual true-ups. Cost of sales declined $141 million in the fourth quarter compared with the prior year's fourth quarter driven by continued improvement in facilities cost optimization and employee cost savings. Selling, general and administrative (SG&A) expenses decreased $178 million for the same period, as a result of workforce rebalancing and cost containment efforts and include $100 million in legal reserve charges in the fourth quarter of 2003.