July 30, 2002	Tuesday	Jamadi-ul-Awwal 19,1423

NEW YORK, July 29: Telecom giant Qwest Communications said Monday it will adjust its financial results for 1999, 2000 and 2001 after discovering errors in the booking of 1.16 billion dollars.

The troubled telecom group’s disclosure late Sunday threatens to further damage the reputation of the company, which is already under federal and securities exchange investigations.

“The company has determined that it has in some cases applied its accounting policies incorrectly with respect to certain optical capacity asset sale transactions in 1999, 2000 and 2001,” the Denver, Colorado-based company said in a statement.

It added it would also withdraw its previously reduced financial projections for 2002.

Qwest will now report its second-quarter earnings on August 8, moving it back from Tuesday.

“Certain adjustments may be required to correct the period in which the revenue was recognized with respect to some transactions, and other adjustments may be required to reverse the recognition of revenue with respect to other transactions,” the statement said.

The move is intended to shore up the company’s damaged reputation, after being targeted for probes by both securities regulators and US prosecutors.

But it is another blow to the hobbled telecommunications industry, hit by wave upon wave of financial scandal.

Qwest said it has uncovered errors that led it to book about 1.16 billion dollars in revenue for 2000 and 2001 in lump sums, instead of over time.

The company did not say how soon the restatement would be made public.

Qwest’s restatement is dwarfed by the record-breaking four-billion-dollar restatement by WorldCom that wiped out all of last year’s reported profit.

The Qwest revelation is the latest in a string of setbacks for the once-vaunted giant and the latest in a string of accounting restatements that have rocked financial markets.

Earlier this month, Qwest acknowledged in a statement that the US Attorney’s office in Denver had informed the firm “that it had begun a criminal investigation of Qwest.”

“The US attorney’s office did not disclose the subject matter of the investigation,” Qwest said in that statement, saying it planned “to fully cooperate” with the investigation.

Formed in 1995 as a fiber-optic company, Qwest joined the ranks of the telecom giants in 2000 with the 35-billion-dollar acquisition of the much-larger regional telephone group US West.

But the merger came at the height of the telecom boom, which led to massive construction of telecom capacity for demand that never materialized, causing the collapse of many firms.

A possible issue for Qwest is whether it properly recorded revenue, as the company was one of the most aggressive users of “swap” transactions.

Last month, Notebaert took over as Qwest’s chief executive after his predecessor, Joseph Nacchio, resigned under pressure.—AFP