For the second quarter ending June 30, Qwest reported an increased net loss of $776m, up from a net loss of $64m. Revenue declined 4.3% to $3.44bn.

During the quarter, the Denver, Colorado-based carrier was hit with charges totaling $487m. This included $300m for an increase in litigation reserves, and $127m related to job cuts after the carrier axed 1,550 positions or roughly 4% of its workforce in an effort to reduce costs. The company also cut its net debt during the quarter by $297m to $17.2bn.

Qwest is the dominant local phone company in 14 states in America, but is also the smallest of the four fixed-line telcos in the US. Like other regional phone companies, it is aggressively pushing high-speed internet and wireless services to help make up for lagging local-phone sales. During the quarter Qwest lost 211,000 local access lines, but added 109,000 high-speed internet lines and 733,000 long-distance lines.

Qwest has been slightly hamstrung due to the fact that it was the only one of the four US local phone companies to lack a mobile phone unit. This deprived it of an important asset to help stem customer defections, but Qwest struck a partnership with Sprint that gave its customers a nationwide wireless-service option.

In the current quarter, the carrier launched its business class VoIP service in four markets. It expects to complete the roll-out of business and consumer VoIP services by the year-end to all major metropolitan markets within the local service area, as well as to businesses in select out-of-market areas.

The carrier and its accounting practices have also been under investigation by the SEC as well as by the Justice Department, for over two years now. The probe has centered on whether Qwest and other carriers inflated revenues by incorrectly booking network capacity deals to meet Wall Street’s revenue expectations.

Last October, Qwest restated its financial results for 2000 and 2001, cutting revenue by $2.5bn and posting larger net losses than previously announced.

To make matters worse, a number of current and former executives were accused of accounting fraud. Last week the SEC accused the former CFO of Qwest’s wireless division of hiding $112m in accounting errors in order to meet the company’s revenue targets.

According to the SEC, Michael Felicissimo once told his controller to bury a document that exposed an error and repeatedly refused to reopen the wireless subsidiary’s books after learning about mistakes.

Qwest overstated wireless revenue by about $57m in 2000, $46m in 2001, and $9m in the first two quarters of 2002, according to the suit filed in US District Court in Denver.

Felicissimo is the 12th former Qwest executive to face a civil suit in connection with deals and accounting practices the SEC has called questionable. So far, four former Qwest executives, namely Thomas Hall, Grant Graham, Bryan K Treadway, and John M Walker, have been charged with criminal wrongdoing in connection with a deal during the period under investigation.

Treadway and Walker were cleared in a trial last year. Graham pleaded guilty to one count of being an accessory after the fact. Hall is scheduled to be retried in October this year.

The SEC recently settled suits against two other former Qwest executives, Augustine Cruciotti and Steven Haggerty. Cruciotti agreed to pay $350,000 to settle the case, and Haggerty agreed to pay $30,000.