Qwest Communications International Inc., the third-largest U.S. local phone company, agreed to increase wages by 9 percent over three years as part of a new contract with its two unions.

The deal also includes a plan to lower health-care costs, the Communications Workers of America said today in a statement. The CWA and the International Brotherhood of Electrical Workers reached the deal today after extending talks past the expiration of their old contracts.

The agreement averts a strike of about 20,000 employees, or 57 percent of Qwest's workers. The unions, which sought wage increases, health-care benefits and future union jobs, represent customer-service representatives and technicians who install and maintain lines.

``We made some improvements on wages and pensions,'' CWA spokesman Al Kogler said today in an interview. While the union still needs a vote to approve the contract in the next few weeks, ``it's a done deal,'' he said.

Qwest fell 9 cents to $3.83 at 4 p.m. in New York Stock Exchange composite trading. The shares have dropped 45 percent this year.

The health-care changes mean employees will have a choice of plans and pay a ``modest monthly premium,'' Qwest spokesman Bob Toevs said.

Negotiations began in early July. The CWA covers employees in the 14 Western and Midwestern states in Qwest's service area, except Montana, where the IBEW represents about 200 employees. Qwest has about 12 million phone lines.

Political Conventions

The settlement comes a week before the Democratic National Convention in Denver, where Qwest is based, and two weeks before the Republican National Convention in Minnesota. Qwest is providing phone and high-speed Internet lines for both events.

Qwest lost 1.08 million phone lines in the 12 months ended in June as customers defected to cable companies and wireless service. The company, third in U.S. phone lines behind AT&T Inc. and Verizon Communications Inc., reported a 24 percent drop in second-quarter profit this month and cut its annual forecast.

Qwest's last union contract negotiations were in 2005, when the company averted a walkout by agreeing to a 7.5 percent wage increase over three years.

The two unions agreed on a new contract with Verizon a week ago. Under those terms, New York-based Verizon will increase workers' wages about 10 percent over three years and continue to provide fully paid health-care premiums for current employees.

Source:Bloomberg