Having lost the auction for MCI last week , despite bidding more than Verizon, Qwest now faces a future as telecom's ugly stepchild.

Not only will it have to compete against the two new megacarriers - Verizon/MCI and SBC/AT&T - but it also will have to do so with $15 billion in debt, the least attractive region of any of the RBOCs, and little presence in hot growth markets such as wireless.

"They have showed their cards, and since they lost the game they are in a weakened position," says David Rohde, a consultant with TechCaliber, a company that advises companies on contractual dealings with carriers. "The financial situation that they're in trumps everything."

It certainly trumped the deal for MCI. Qwest made four offers for the interexchange carrier, all higher than Verizon's bids and all turned down because of the carrier's uncertain finances after 2002's alleged accounting fraud. MCI ultimately stated that some of its largest enterprise customers would seek to end their contracts with the carrier should it choose Qwest's $9.9 billion offer over Verizon's $8.5 billion bid.

Despite the snub, Qwest remains encouraged, especially after reporting its first profitable quarter after five consecutive losing quarters. CEO Richard Notebaert says the carrier is "aggressively" pursuing other opportunities to drive future growth.

"We have a number of strong options before us," Notebaert said during a conference call to discuss the first quarter results. "We've already begun looking at those options in earnest."

He would not elaborate on what those options are, but said they might include picking up some of the assets divested by SBC/AT&T and Verizon/MCI as they integrate their operations under the watchful eye of the Securities and Exchange Commission and other regulators.

"We'd be very open to that," Notebaert said, adding that Qwest is looking at how it can create a "meaningful third leg" to the SBC/AT&T and Verizon/MCI mega marriages. "It's a good opportunity for us."

Another opportunity, according to analysts, is a three-way combination of Qwest, Sprint and BellSouth. Qwest already has arrangements with both: It resells Sprint's Sprint PCS wireless service and provides out-of-region, long-distance facilities for BellSouth.

For Qwest, this possibility would provide it with a credible wireless presence - Sprint is acquiring Nextel to become the third-largest wireless operator in the U.S., behind Cingular and Verizon Wireless - and expand its local access reach into BellSouth's nine-state region in the Southeast.

"What this is really all about is that third supercarrier," says Thomas Nolle, president of consultancy CIMI. "I don't think Qwest and Sprint by themselves would be strong enough to be the third supercarrier, which means the BellSouth deal would have to be made."

Sprint, however, is busy working out its $36 billion deal for Nextel , so it's not likely to make a run at Qwest. Even if it did not have its hands full with Nextel, Qwest - with its rural, Rocky Mountain territory and huge debt - would not add much to Sprint.

And Sprint's $33 billion market capitalization might make it too pricey for Qwest, whose own market cap stands at about $7 billion.