Good news again for CWP:
MCI May Sell Internet Business
By JEANNINE AVERSA
Associated Press Writer
WASHINGTON (AP) -- MCI Communications Corp. (Nasdaq:MCIC - news) is leaning toward selling the rest of its Internet business to a British company to help get U.S. antitrust approval of a planned merger with WorldCom Inc. (Nasdaq:WCOM - news), industry sources said Monday.
London-based Cable & Wireless (NYSE:CWP - news) agreed to buy MCI's wholesale Internet in May and is now the leading contender to buy the rest of MCI's retail Internet business, the sources close to the negotiations said, speaking on condition of anonymity.
The retail assets could fetch as much as $2 billion, according to industry analysts.
Last week, European regulators approved the $37 billion WorldCom-MCI merger on the condition that MCI sell its entire Internet business. A sale of MCI's retail and wholesale Internet assets to Cable & Wireless would accomplish that.
The European Union's antitrust regulators action was expected to clear the way for the merger's approval by the U.S. Justice Department, which has been working closely with regulators on the other side of the Atlantic.
MCI is expected to publicly disclose the name of the buyer of the its Internet retail assets after the Justice Department acts, which could happen this week, the telecommunications sources said.
A Justice Department spokeswoman would not discuss the timing of its decision on the merger and said ''we're still reviewing the deal.''
The Federal Communications Commission also must give its approval for the WorldCom-MCI merger to be consummated. The FCC could make a decision on the merger next month.
U.S. regulators and, until last week European regulators, have been reviewing the merger plans and have been looking closely into whether the combined company would crimp competition and possibly raise prices in the Internet ''backbone'' business.
Internet backbones are high capacity networks that carry Internet and other data traffic for third parties.
Cable & Wireless in May said it would buy MCI's Internet backbone business -- all the switches, routers and other equipment that comprise the network -- as well as contracts with 1,300 Internet service providers for $625 million.
Now the sources said MCI is expected to sell to Cable & Wireless contracts for all of its business and residential Internet customers -- a move that would get MCI out of the retail Internet business. It also would satisfy the EU's condition for approving the WorldCom-MCI merger.
''It is better for MCI to sell the Internet assets in one chunk because it instantly creates another Internet competitor, which would make for a more competitive marketplace,'' said Jeffrey Kagan, of the Atlanta-based consulting firm, Kagan Telecom Associates.
AT (NYSE:T - news)&T Corp., PSINet Inc. (Nasdaq:PSIX - news) and IXC Communications (Nasdaq:IIXC - news) also have been interested in buying MCI's Internet business, analysts said.
Between WorldCom's Internet business and MCI's, European regulators had estimated that a combined company would have controlled about half of the world's Internet traffic. This concern prompted the EU's condition that MCI must sell all of its Internet business to be able to merge with WorldCom.
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