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Four analysts and top management from twenty-two sector firms examine the communications services sector in this special 98-page Comunications Services issue from The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info470.htm.

TWST: Should they also look at it as a potential acquisition candidate?

Mr. Morabito: Yes. We don’t think Qwest (NYSE:Q) gets enough credit as a takeover candidate. We believe that there are many different ways to look at Qwest, and the one that is being relatively ignored is that Qwest is a possible merger candidate here. We would consider that to be icing on the cake, however. If you look at it strictly from a valuation perspective, we think that the market is giving negative value to the company’s broadband operations and its international assets. If you look solely at the old U S West, we think the stock is worth $15 a share, and it is trading at only $12 a share. So the market is almost assigning a negative $3 value to the long-haul network, to the long distance business, KPNQwest, and everything else that Qwest has going on. We do think that is an interesting play. There is more risk associated with it, so it could be a bumpy ride, but Qwest is a stock to take a look at these levels.

TWST: Do you see any emerging business areas developing over the next year or two, perhaps spurred by new technologies or new approaches?

Mr. Morabito: Really, probably the newer angles on this will be through wireless, and it remains to be seen how that’s going to develop. Right now they’re talking about 2.5G, and then eventually it’s going to be 3G. These are going to be exciting new technologies and the early adaptors are going to be all over it like a wet blanket. The question, however, remains whether or not there is widespread demand for these services among mainstream users. A lot of people out there might not see a need to check sports scores, watch videos on their cell phones and send e-mails through their cell phone. That being said, we do think that most of the innovation will come through the wireless realm. There will always be some sorts of innovation coming from the data Internet applications, more expanded use of video streaming, the live video downfeeds, video conferencing, things of that nature that are going to help alleviate the so-called bandwidth glut. There are so many applications that are coming down the pike that are really just on the drawing board right now and we can only just imagine what they’ll look like down the road.

TWST: I would think that there are a lot more longer-term investors out there today than there were a year or two ago.

Mr. Morabito: We would agree with that 100%. Right now you want a level of safety combined with the potential for growth. And in terms of the concerns with the Bells, it’s really that the growth has slowed down a bit. You’re looking at, by our forecasts for revenue EBITDA and EPS, really mid-single-digit growth for 2002. We’re hoping that 2002 is the year, once again, when telecom kind of regroups and regathers itself and then in 2003 the growth can pick up again. There’s just a lot of cleanup work that needs to be done. A lot of people talk about an oversupply of fiber or capacity. I talk more about an oversupply of carriers. There’s a lot of wreckage that needs to be cleaned up in 2002, and I do think that the growth will pick up in 2003 and then we can take it from there.

This special issue includes:

1) Communications Services & Equipment - In an in-depth (4,500 words) Analyst Interview, Rick Franklin & Gary Mobley, both Senior Industry Analysts at Bank of America Capital Management, examine the outlook for the sector and share specific stock recommendations.

2) Emerging Communications - In an in-depth (4,100 words) Analyst Interview, Vik Grover, Managing Director at Kaufman Bros., L.P., examines the outlook for the sector and shares specific stock recommendations.

3) CLEC & Incumbents - In an in-depth (4,300 words) Analyst Interview, Thomas Morabito, First Vice President/Senior Telecom Analyst at McDonald Investments, Inc., examines the outlook for the sector and shares specific stock recommendations.

4) CEO interviews (average 2,500 words). Top management of twenty-two sector firms examine the outlook for their firm and the sector.