Looks like it's finalized.
Wednesday July 15, 7:48 pm Eastern Time
Company Press Release
SOURCE: Cable & Wireless
Cable & Wireless Announces Acquisition of MCI Internet Business For $1.75 Billion
Major US Internet Acquisition Establishes Cable & Wireless As A World-Leading Internet Provider
VIENNA, Va., July 15 /PRNewswire/ -- Cable & Wireless (NYSE: CWP - news, CWZ - news) announced today (15 July 1998) it has agreed to acquire MCI's (Nasdaq: MCIC - news) US Internet communications business -- one of the largest in the world -- for $1.75 billion in cash (approximately 1,070 million British pounds sterling).
The deal dramatically enhances Cable & Wireless' position in the booming US Internet market, forecast to grow at overall rates of between 50 and 100 percent each year.
This exceptional package of assets became available at short notice from MCI only to expedite the MCI WorldCom (Nasdaq: WCOM - news) merger. It includes a substantial corporate customer base, making a more complete and valuable business.
The businesses and approximately 1,000 specialist employees to be transferred from MCI will be integrated with the Cable & Wireless Group's existing operations in the US and its extensive international networks. This acquisition positions Cable & Wireless as one of the most powerful integrated data, voice and Internet businesses in the world.
Cable & Wireless already has leading Internet businesses in the Asia Pacific region and a strongly growing position in the UK. It is a major carrier of Internet traffic to the US.
Cable & Wireless Chief Executive Richard H. Brown said: ''This is a tremendous opportunity for Cable & Wireless. It would take years to build a business like this.
''The Internet is the future of communications. Cable & Wireless now has an unmatched global position in Internet and data communications, in this explosive sector. We will now be able to combine, for the benefit of our customers, a strong US position with a major presence across the world.''
Details of the transaction
The transaction is forecast to bring Cable & Wireless some $650 million of revenues in the year to 31 March 2000.
The elements of the acquisition are:
1. US nationwide Internet backbone -- the backbone, comprising all
22 domestic nodes, 15,000 interconnection ports, more than 40 ongoing
peering agreements, routers, switches, modems, e-mail servers and other
equipment dedicated to its support. The network features high speed
dedicated access as well as toll-free nationwide and local dial-up
access from more than 300 points across the US.
2. Dedicated Access Customers -- Cable & Wireless will gain 3,300 major
dedicated Internet access corporate customers.
3. Internet Service Provider (ISP) Customers -- Cable & Wireless will
acquire approximately 1,300 ISP customers, including 130 International
Directly Connected Customers (IDCs) in more than 75 countries. ISPs'
contracts with business and mass market users provides Internet,
billing and customer services.
4. Dial-up business -- this business provides nationwide dial-up Internet
access for more than 250,000 consumers and 60,000 business users.
5. Web hosting and managed firewall services -- these businesses include
over 100 corporate accounts and associated servers.
6. The terms include non-compete agreements for transitioning accounts of
24 and 18 months for wholesale and dedicated retail customers
respectively.
The Internet backbone services business and its ISP customers (items 1 and 3 above) were the subject of an agreement between Cable & Wireless and MCI announced on 28 May 1998. Today's new agreement includes the transfer of MCI's retail Internet customer base.
Cable & Wireless companies world-wide are major players in the rapidly growing market for Internet services. Hong Kong Telecom (NYSE: HKT - news) is the largest ISP in the Asia Pacific region, with 235,000 customers. Optus is a major carrier of Australia's wholesale Internet traffic. Cable & Wireless Communications in the UK and Hong Kong Telecom are pioneering the use of Internet technology for digital entertainment television.
The US operations will be led by Carl Grivner, who was recently appointed Cable & Wireless Chief Executive, Western Hemisphere. With a technical, marketing and management background in IBM and Ameritech, Mr. Grivner was previously Chief Executive Officer of Advanced Fibre Communications of Petaluma, California, which designs, develops and markets leading-edge telecommunications equipment. Rich Yaten, Chief Executive of Cable Wireless USA will report directly to Mr. Grivner.
Cable & Wireless USA is a leading provider of long-distance and international communications services, serving approximately 100,000 business customers in 50 states with a range of voice, data, messaging and Internet services. The company has annual revenues in excess of $1 billion and 2,200 employees. Cable & Wireless will take on approximately 1,000 people who are currently MCI employees.
The announcement of this transaction follows the outcome of deliberations by the European Commission and the US Department of Justice on the competition implications of the MCI/WorldCom merger.
Completion of the Cable & Wireless acquisition from MCI is conditional on the closing of the MCI/WorldCom merger and certain regulatory approvals. In addition, either Cable & Wireless or MCI can pay a break-up fee of 15 percent of the amount of the purchase price to terminate the transaction before completion.
The business will be acquired on a debt-free basis with assets of approximately $100 million. For the year to 31 December 1997 it had turnover of $244 million. It is expected that the EBITDA margin for the year ended 31 March 2000 will be approximately 10 percent.
SOURCE: Cable & Wireless
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