Technology News
Tue, 23 Jun 1998, 8:24pm EDT
BN 6/23 Cable & Wireless in Talks to Buy MCI Internet Assets (Update3)
Cable & Wireless in Talks to Buy MCI Internet Assets (Update3)
(Updates value of WorldCom's purchase of MCI to reflect
stock activity. Updates with closing stock prices)
New York, June 23 (Bloomberg) -- Cable & Wireless Plc Chief
Executive Richard Brown said the second-biggest U.K.-based phone
company is in talks to buy the Internet assets that MCI
Communications Corp. must shed to get regulatory approval for its
acquisition by WorldCom Inc.
The European Union yesterday agreed to approve No. 4 U.S.
long-distance provider WorldCom's proposed $44.3 billion purchase
of No. 2 U.S. long-distance company MCI, after MCI said it would
sell its Internet business. The business could fetch more than
$1 billion, analysts estimate.
Buying MCI's Internet operations would greatly bolster the
U.S. presence of Cable & Wireless. It also could make the British
company a more likely takeover target for companies that want to
expand their international reach.
''If this goes through, we certainly have not heard the last
of Cable & Wireless,'' said Ken McGee, an analyst with Gartner
Group in Stamford, Connecticut. ''This is a prelude to Cable &
Wireless ultimately being acquired.''
Cable & Wireless rose 8 pence to 658 pence. Jackson
Mississippi-based WorldCom rose 3/8 to a record 47 15/16, while
Washington-based MCI rose 3/4 to a record 57 11/16.
MCI and WorldCom expect to complete their combination this
summer, creating the second-largest U.S. phone company behind
AT&T Corp.
Talks
Cable & Wireless agreed last month to buy MCI's wholesale
Internet business, which carries traffic for other Internet
service providers, for $625 million.
When that failed to stem regulatory opposition, MCI offered
to sell all of its Internet businesses and said it will shed its
consumer and business customers.
''Cable & Wireless is in discussions with MCI right now
about whatever it is they may need to sell to satisfy
regulators,'' Brown said. ''We remain highly interested and we
are pursuing with MCI, in great earnestness, discussions about
the possible acquisition of this asset base.''
MCI wouldn't comment on potential buyers for the Internet
assets.
The European Commission, the EU's executive agency, will
hand down its formal approval July 8 with U.S. regulators
expected to give their blessing soon after. MCI will probably
wait until it gets the regulatory green light before unveiling a
buyer for the Internet operations.
If talks with MCI aren't successful, Brown said Cable &
Wireless will look for other ways to boost operations in the U.S.
''We are looking for ways to accelerate our growth,'' he
said. Cable & Wireless is the sixth-largest carrier of long-
distance traffic in the U.S., with sales of $1 billion and annual
growth of 18 percent, he said.
Internet
Cable & Wireless transmits a third of the world's Internet
traffic outside the U.S., Brown said.
''The future of communications is the Internet,'' Brown said
from the Royal Princes M/S at a marina near the World Financial
Center in New York. ''It's an extremely efficient way to transmit
data.''
MCI WorldCom will control about a quarter of the $70 billion-
a-year U.S. long-distance market and offer local services in more
than 100 cities.
Brown was in New York to welcome the Cable & Wireless
Adventurer. The 115-foot Adventurer and her 16-person crew are
trying to set the record for a powered vessel by circumnavigating
the globe in less than 80 days.
--Colleen McElroy in New York with Andrew Brooks and Alison Jahncke through the Princeton newsroom (609) 279-4069/gcr/jpw/gcr
|
