Channel Partners

December 1, 1997

8 Min Read
MCI: More Changes Imminent

Posted: 12/1997

MCI: More Changes Imminent

WASHINGTON–Those holding their breath to see what the second
largest long distance provider would do with three attractive buy
offers on the table can now exhale.

Unanimous approval by both MCI and WorldCom boards of
directors and public announcement have taken WorldCom, Jackson,
Miss., and MCI, Washington– "the most coveted
communications company in town in recent days," according to
WorldCom President and CEO Bernard J. Ebbers–one step closer to
completion of a $37 billion merger that will mean the creation of
MCI WorldCom. The deal will be accounted for as a purchase and
will be tax free to MCI shareholders. It is expected to be
accretive to WorldCom’s earnings by about 20 percent in the first
year after closing.

All that remains for creation of the mega-carrier is approval
by various U.S. regulatory agencies and review by the European
Commission. MCI and WorldCom anticipate the merger will close
within nine months.

Ebbers, who becomes MCI WorldCom’s president and CEO, says the
combined companies plan "to go after the local market with a

WorldCom has pretty much gone after several telecom market
sectors with a vengeance with about 40 acquisitions in the past
five years that include the likes of MFS Communications, UUNET
Techno-logies, CompuServe, America OnLine Network Services,
Brooks Fiber Properties and now, MCI.

MCI accepted WorldCom’s increased offer of $51 a share from an
earlier offer of $41.50 a share in WorldCom stock that will be
paid to all shareholders other than British Telecommunications
PLC (BT). BT, which holds a 20 percent interest in MCI, will be
cashed out. "It removes the overhang of having a large
shareholder in the marketplace that could subsequently sell
stock," said WorldCom CFO Scott D. Sullivan, who will serve
as CFO for the merged companies. GTE also had made a bid for MCI,
offering $28 billion or $40 a share in a cash bid that would have
created a company with about $40 billion in annual revenues.
Roberts said GTE did not make a counter offer.

BT will receive $7.4 billion in cash for its MCI shares and
$465 million in exchange for its broken deal with MCI, a move BT
shareholders approved. MCI shareholders will own about 45 percent
of the merged company with WorldCom owning about 55 percent.

TMC to Provide Energy, Too

SANTA BARBARA, Calif.–TMC Communications announced it will
join the coming energy revolution when electric utilities become
deregulated in January 1998. The new firm will be called TMC
Energy Inc.

"Californians have seen their long distance telephone
bills drop by over two thirds following the deregulation of phone
service. We expect TMC Energy will give them the same large drop
in their energy bills," said TMC Communications Chair John

ELI Builds Backbone to Bypass Internet

SACRAMENTO, Calif.–Electric Lightwave Inc. (ELI) announced
plans to expand its Internet network into San Francisco and Los
Angeles. ELI has "built private onramps to the
Internet," said Dave Gilbert, Internet product manager for
ELI. "Our strategy has been to avoid official network access
points (NAPs). To me, using NAPs is like using the onramps to the
highway at rush hour." ELI has secured private interconnect
points with carriers such as MCI, Sprint and UUNET to avoid
sluggish connections.

RELTEC Expands Services Arm

CLEVELAND–RELTEC Corp. announced it will acquire Custom
Design Telephone Systems Inc. (CTDS), an independent provider of
integrated telecommunications services. Obtaining the firm
"adds to and expands the comprehensive capabilities we
possess today within our RELTEC Services business," said
Dudley Sheffler, president and CEO of RELTEC.

RELTEC Services is the company’s turnkey program management,
consulting, engineering, furnishing, installation and training
arm. CTDS brings to the company a line of telecommunications
systems design, installation and maintenance services offered by
the Infrastructure Group and Interconnect Group.

LCI International Purchases New Fiber Route

MCLEAN, Va.–LCI International has agreed to purchase a
position in a 1,925-mile fiber optic cable between Washington and
Dallas from Williams Communications Group Inc. With this
purchase, LCI will own more than 7,000 fiber miles of network

LCI officials expect to begin moving traffic off its leased
facilities onto portions of the new route beginning in the second
quarter of 1998.

LDI to Resell Prepaid Wireless

FORT LAUDERDALE, Fla.–Long Distance International’s new
wireless division, LDI Wireless, has signed a resale agreement
with GTE Wireless.

GTE will provide LDI with a seamless cellular service, which
does not use smart phones or 800 numbers to access the service.
LDI Wireless will launch a bill-free, prepay cellular service in
Tampa, Fla., Houston and San Diego. Customers will be able to
prepay cellular airtime in 30-minute, 60-minute and 90-minute
increments. LDI intends to launch its bill-free cellular and
personal communications services nationwide in 1998.

Frontier Restructures, Sells Prepaid Business

ROCHESTER, N.Y.–Joseph Clayton, president and CEO of
Frontier, recently announced the company’s intention to divest
product lines and businesses which are not critical to its
long-term growth.

In light of this intention, Frontier will sell its retail
prepaid calling card business to SMARTALK Teleservices Inc. for
$35 million. "Product lines that distract from our core
business and inefficiently utilize our resources can no longer be
part of our business portfolio," said Clayton.
"Frontier has been successful in securing prepaid accounts
with Fortune 500 retail companies. But I believe we lack the
retail savvy and critical mass to make this a core competency.
With our principal focus on the business market, these retail
card accounts will be better served by SMARTALK."

More Companies Line Up for Qwest’s Dark Fiber

DENVER–Qwest Communications has signed five sales agreements
totaling about $90 million to provide capacity on its dark fiber
network to third parties.

Although Qwest would not disclose the names of the companies,
it did say they included a telecommunications service provider,
an Internet service provider, a local exchange carrier and other
telecommunications companies.

ICG, NETCOM Plan Merger

ENGLEWOOD, Colo.–ICG Communications Inc. and NETCOM On-Line
Communication Services Inc. entered an agreement to merge the
companies. The merger would create a business communications
company providing a single source for voice, data, Internet, web
hosting and other communications services over an extensive fiber
optic network.

Saville, Oracle Team Up

LOS ANGELES–Saville Systems recently announced it has teamed
up with Oracle Corp. Saville will combine its customer care and
billing platform with Oracle’s universal data server to give
telecom service providers the flexibility to add new products and
services to their offerings without sacrificing Saville’s
software’s business functionality. As a member of the Oracle
Alliance program, Saville will receive technical support to help
it integrate its Convergent Billing Platform with the Oracle
Universal Server. In turn, Saville will provide Oracle with
access to the convergent billing and customer care market.

US WEST to Split Media Group, Communications

ENGLEWOOD, Colo.–US WEST Inc. recently announced it will
split US WEST Media Group and US WEST Communications Group into
separate public companies next year. This move to create two
independent companies will allow both groups to focus on
developing the full potential of their respective distribution

US WEST Communications Group will be renamed US WEST Inc. The
new US WEST will include the telephone, data and wireless
operations of the Communications Group, as well as the Yellow
Pages and electronic directory business known as US WEST Dex.

US WEST Media Group will be renamed MediaOne Group Inc.,
echoing the brand by which the company’s cable distribution
system is known. MediaOne Group assets will include the company’s
interests in the Time Warner Entertainment partnership, the
wireless operations of US WEST New Vector Group and all of US
WEST’s international interests and interactive services.

Highland Lakes Supplies CAS to New Global

AUSTIN, Texas–Highland Lakes Software Inc. announced its
agreement with New Global Telecom of Golden, Colo., to provide
its communications accounting system (CAS). CAS offers the
international marketplace flexible call rating capability,
multilingual support and the experience of servicing
telecommunications firms around the world.

"New Global Telecom is a major International carrier’s
carrier," said Dennis Kilebrew, director of marketing for
Highland Lakes. "We are honored to have been chosen to fill
its information technology and billing needs."

ACC Mergers Pending

ROCHESTER, N.Y.–ACC Corp. recently announced it will merge
with US WATS Inc., a switched-based long distance service
provider headquartered in Bala Cynwyd, Pa.

The transaction is valued at $46 million, or about $2.48 per
share of US WATS common stock.

ACC also announced that its board of directors is reviewing an
unsolicited proposal from Tel-Save Holdings Inc. for a merger
between the two companies.

MGC Focuses on Network Faults and Management

SAN DIEGO–Applied Digital Access Inc. (ADA) announced that
MGC Communications has licensed ADA’s traffic data collection and
engineering system (TDC&E), as well as its fault management
system (FMS). This software will allow MGC to increase
productivity by focusing resources on network faults and engaging
in proactive network maintenance.

ADA’s TDC&E features a web-based browser and an open
interface to traffic data to collect operational measurements
from Nortel DMS 500 switches in MGC’s network.

ADC, NewNet Merge

SHELTON, Conn.–ADC Telecommunications Inc. and NewNet Inc.
announced a merger between the two companies. The merged company
now will be known as ADC NewNet. ADC NewNet will continue to
operate as an independent subsidiary of ADC.

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