MarketWatch Renegade
MCI exec: No more growth in telephone calls
By CBS MarketWatch
Last Update: 3:50 PM ET Sep 28, 1999 Hardware Report
SAN FRANCISCO (CBS.MW) -- Internet data communications and international business are on the way to becoming the largest revenue streams of MCI Worldcom's business, a company executive said Tuesday. Speaking at the Banc of America Securities Conference in San Francisco, John Sidgmore, vice chairman, said MCI Worldcom (WCOM: news, msgs) and other telephone companies can no longer rely on voice communication for revenue growth. Part of the reason is that general sales and administration costs make up nearly half of a phone call's charges, Sidgmore said. "Its more expensive to bill you for the service than it is to provide it," Sidgmore said. In MCI Worldcom's most recent quarter, year-on-year revenue on a pro forma basis from voice communications increased a paltry 6 percent compared to a 59 percent jump in revenue from Internet communications and a 56 percent hike in international revenue. Its one reason MCI Worldcom is aggressively buying Internet and data communication companies. It has made 75 acquisitions in the past four years. He said the company will remain just as aggressive with its corporate purchases over the next few years. Demand for Internet networks is increasing 1000 percent a year, according to Sidgmore. "That means you have to increase by 10 times the capacity of networks just to stay even." Network demand will jump over the next few years in part because wireless and hand-held devices that access the Internet are seen gaining in popularity. Even household appliances such as refrigerators will access the internet. "After 100 years of a boring business, this is the golden age of communications," Sidgmore said. |
