US West, Qwest Agree to Merger Conditions

In a move to win approval of their planned merger, US West Inc. and Qwest Communications International Inc. reached a settlement with Washington state regulators that would freeze phone rates until 2004 and establish financial incentives for quality control. The agreement requires the merged company to improve the state’s telecommunications network and to meet certain quality standards or else pay customers as much as $20 million a year. The settlement comes a day after Qwest acknowledged talks with Deutsche Telekom of Germany about a deal to acquire both Qwest and US West. Deutsche Telekom would not comment Monday on the developments between Qwest and US West, nor on whether it was in talks with Qwest. On the New York Stock Exchange, US West closed off 25 cents at $74.88 while Qwest fell $4 to close at $60.