US West to Spend More on Improvements

Regional telephone company US West Inc. said it will increase spending on its communications network this year, forgoing near-term profit growth to prepare for an expected assault by AT&T; Corp. The company, which provides local phone service in 14 states stretching from Minnesota to Washington, said that as a result, its profit this year will grow by about 10%, down from its earlier estimate of 12% to 14%. The announcement caught investors and Wall Street analysts by surprise. US West shares tumbled $4.56 to close at $57.63 on the New York Stock Exchange. US West said it will spend $100 million to improve its existing network and an additional $200 million to develop a more advanced network to speed introduction of new video, data and wireless services and products. It also will increase spending to fend off aggressive moves by competitors. AT&T; is buying cable TV giant Tele-Communications Inc. for $48 billion and plans to provide local phone service over TCI’s cable wires. Until now, the Baby Bells have seen only modest competition from smaller upstart carriers, analysts said.