Telephone firm Qwest Communications International, one of the major US corporations caught up in a wave of accounting scandals earlier this year, has unveiled sharply higher losses.

I'd rather be bouncing along the bottom than declining still

Qwest chairman Dick Notebaert

Qwest said on Tuesday that losses for the three months to September widened to $214m (�137m), from $142m during the same period last year.

The company has now failed to turn a profit for two and a half years.

The company, the biggest local phone firm in 14 US states, blamed intensifying competition and weak economic conditions.

Criminal probe

However, the figures, which were in line with analysts' expectations, were met with cautious approval on Wall Street.

Qwest shares closed 6.6% higher at $3.39 on the New York Stock Exchange.

"The quarter was better than a 'worst case scenario,' which for Qwest is a positive," said JP Morgan analyst Marc Crossman.

Qwest, one of the rising stars of the 1990s technology bubble, has been hit hard by the downturn in demand for telecoms equipment and services over the last two years.

It is also facing a criminal investigation into its accounts, launched during the summer after it emerged that the firm may have improperly accounted for sales of optical capacity on its network.

Fighting on

Qwest, now under new management, has said that it may restate about $1.5bn in sales, and could also write off $40.8bn to reflect the dwindling value of some of its assets.

The company is hoping to turn itself around by cutting jobs and getting rid of loss-making businesses.

Qwest chairman Dick Notebaert said the firm continues to "bouncing along the bottom."

"And that's a good thing, because I'd rather be bouncing along the bottom than declining still," he added.