Troubled US telecoms giant Qwest, which is facing federal inquiries into its accounts, has said it might restate up to $1.5bn (�1bn) in revenues and costs.

That is up from its original estimate of $1.16bn in improperly booked sales and other items during a two-year period to 2001, as revealed in July.

The latest revelations were made ahead of a series of hearings by the US House Energy and Commerce committee into deals Qwest made with Global Crossing, Flag Telecom and Cable & Wireless.

The exact size of any new adjustments of Qwest's accounts have not yet been determined, and the figures are difficult to compare since Qwest now says it will only restate its results since its June 2000 takeover of the local telephone company US West.

Resolution

Qwest said it would probably restate $950m in relation to a series of swaps of fibre-optic network capacity with other telecoms firms.

In addition, it might restate up to $531m in cash sales of optical capacity.

The company saw this as a "first step toward a possible resolution" of its discussions with the market watchdog Securities and Exchange Commission (SEC).

Qwest reiterated that its historical financial statements for 2000, 2001 and the first quarter of 2002 were unreliable.

Bankruptcy threat

Qwest's debts remain massive at $26.5bn, and the value of its telephone network, fibre-optic network and inventory is to be written down in its third-quarter accounts.

Yet it could avoid bankruptcy after having landed an agreement with its creditors to amend a $3.4bn credit facility.

But regardless of its financial situation, the regulators will continue their inquiry into the way Qwest and other telecoms firms inflated their revenues by booking sales of network capacity in one lump sum.

The proper accounting method for such transactions is to spread the income over the lifetime of a contract, the SEC ruled last month.

The regulators are also making inquiries into whether Qwest and others traded excess capacity in each others' networks in order to create an appearance of high sales volumes.