The day after federal regulators tapped WorldCom on its shoulder, Qwest ducked and covered. Shares of Qwest (NYSE:Q), Oregon’s largest telephone carrier, fell 57% to $1.79, as investors scrambled to sell their holdings in the beleaguered telecom company.

The Securities Exchange Commission (SEC) charged WorldCom Inc. (Nasdaq: WCOM) with fraud on Wednesday, saying the telecom giant hid $3.8 billion of costs, in one of the biggest accounting scandals ever.

This news traveled at the speed of electronic data to the doorstep of Denver-based Qwest. The company’s new CEO, Richard C. Notebaert, immediately issued a statement saying: ”What has happened at WorldCom is unfortunate for our industry; however, Qwest is a different company and I wouldn’t be here if I didn’t believe that. I’m confident that Qwest is moving in the right direction, and we have the ability to perform for our customers, employees and shareowners.”

A company spokesman for Qwest would not comment on how much revenue Qwest has received from WorldCom for renting its network, nor what effect that might have on Qwest. The spokesman would also not elaborate on what Notebaert meant by Qwest being ”a different company.” In fact, this year, the SEC opened an investigation of the accounting practices of the Denver-based communications company.

The SEC is taking a tough stance against how the company accounted for as much as $1.4 billion in sales of fiber-optic capacity and how soon they recognized the revenue on their income statement.

Since then Qwest has been fighting a credibility issue with Wall Street and its own customers, especially in Oregon.

”Telecommunications is our number one complaint,” said Jan Margosian, a spokeswoman for the Oregon Attorney General’s office. Qwest is a large component of those complaints. Qwest operates in 14 states along the West Coast and the Southwest, and has about 1.5 million customers in Oregon, with another 2.6 million in Washington.

Margosian said she was not sure if this trauma would trickle down to consumer prices yet. In Oregon they provide long distance and local on Qwest and Verizon exchanges as MCI WorldCom Inc.

”One of the problems is that WorldCom is paying Qwest and Verizon,” said Margosian. ”Those companies could deny access to their networks to these consumers. It could result in them not getting service in particular areas. We worry about that.” Margosian could not say which areas would be affected.

If a fall in share price is any proxy for consumer concern, Qwest’s stock has fallen 85 percent in a year. The company’s annual report for 2001 depicts a dark tunnel with a light at the end. For investors who were still holding shares of Qwest on Wednesday morning, that light was the steam locomotive that ran them over.

Some investors were taking a long shot on greener pastures at Qwest when it said it would try to re-enter the more lucrative long distance market. As the only Baby Bell without regulatory permission to provide long distance in any of its states, Qwest has been trying to enter the long distance market in the West.

A company spokesman for Qwest said WorldCom’s debacle did not pose a threat to Qwest’s long distance plans.

Kevin Max can be reached at kmax@bendbulletin.com