The troubled US telecoms firm Qwest has announced more bad news, posting a worse-than-expected loss for the April to June quarter.

The firm, the dominant local telephone company in 14 states, also cut its financial forecasts for the rest of the year.

Last month Qwest admitted that it had used improper accounting methods, following in the line of similar admissions from Enron and WorldCom.

The company is also under investigation by the US Department of Justice and the financial regulator.

Worse outlook

A drop in demand for Qwest's data services was behind the poor results.

Revenue fell 17% to $4.32bn (£2.95bn), from $5.22bn in the same period last year.

Excluding one-off charges, Qwest reported a loss per share of 13 cents, against analysts' expectations of a 7 cent per share loss.

The company posted a net loss of $1.14bn for the quarter, which included a one-off charge of $926m.

This charge included a $740m writedown for its remaining investment in bankrupt KPNQwest, and $119m of provisions related to WorldCom.

In addition, Qwest cut its revenue and earnings forecasts for the rest of the year, blaming the sluggish US economy and fierce competition from rivals.

The firm said it now expects a full year loss per share of 46-49 cents, with revenues of $17.1-17.4bn.

Under investigation

Last month Qwest said it had improperly accounted for about $1.16bn (£740m) in sales of optical capacity on its network, as well as sales of communications equipment.

The company is to restate its profits for the past three years, but said that although it is in talks with its auditors KPMG over what changes need to be made, it could not say when the new figures would be available.

In March, Qwest announced that its accounts were being studied by the US Securities and Exchange Commission (SEC), and nearly a month ago it said it was also under criminal investigation.

The SEC is looking at whether Qwest artificially inflated revenues by recording sales incorrectly.