Qwest Communications’ outgoing Chairman and CEO Richard Notebaert hinted broadly this morning that an announcement is forthcoming of his replacement. In the Q&A session following what could be his last earnings call with Qwest, Notebaert told analysts the new executive will be announced “sooner rather than later.”

It would make no sense to name a new chairman/CEO just as that individual would be required to certify quarterly results, Notebaert added, hinting that once those earnings are out, his replacement could be named.

Qwest announced higher quarterly profit, primarily on the basis of spending discipline, as operating revenues declined year-over-year and the company continued to lose access lines in both its business and consumer units. On the positive side, the company announced its twelfth consecutive quarter of EBITDA margin expansion year-over-year, a sequential increase in total revenue fueled by data growth, and adjusted free cash flow of $829 million, up 86% from a year ago. The company’s wholesale revenues were essentially flat, as Qwest was able to produce sales that made up for the revenue loss represented by BellSouth’s business, now that it is part of AT&T.

Qwest reported earnings of $246 million, or $0.13 per diluted share compared with earnings of $117 million, or $0.06 per diluted share in the second quarter 2006. Operating revenue for the second quarter 2007 was $3.5 billion, down 0.3% from a year ago.

On the access line side, business access lines were down 7.5%, mass-market access lines were down 6.9% including consumer and small business.

Unlike AT&T or Verizon, Qwest doesn’t have a wireless unit with growing revenues to offset its loss of access lines. The company does sell wireless as part of its service bundle on an MVNO basis, and CFO John Richardson said the company sees wireless as “a big part of the success we are having in the mass market” selling bundles. Qwest increased its bundle penetration to 60% in the quarter, up from 54% a year ago. The company boosted its broadband revenues by 41% and improved its penetration as well. The company added 66,000 net DirecTV video subscribers.

Qwest cut its cost of sales by 6% and its overall operating expenses by 4.2%.

The overall results fell just short of analysts’ expectations, and Notebaert admitted the second quarter was a little soft, but reiterated that he believes the important thing is Qwest living up to what it promised to do.

“Our goals were to drive modest revenue growth, improve EBITDA margins through optimization and productivity initiatives and improve free cash flow,” Notebaert said. “I think our strategies are working. We have momentum, it’s tangible, and we have a positive outlook for the future based on opportunities in front of us. We have done what we’ve said we would do.”

Notebaert also challenged the need for Qwest to do a massive fiber buildout such as AT&T and Verizon have done, given its ability to provide video service via a satellite partner, “getting a return on investment without capex.” Given what is happening with Internet video, he added, a massive capital investment to provide video just doesn’t make sense.

“We feel even more confident in the direction we are going and our ability to meet our goals,” he said.