C&W has money burning a hole in its pocket:
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WEDNESDAY SEPTEMBER 16 1998ÿÿTelecomsÿ
C&W commits $1bn to internet business
By Alan Cane
Cable and Wireless, the UK telecommunications group, is committed to spending $1bn over the next five years to maintain and expand its newly acquired internet business.
MCI of the US sold the business to C&W for $1.75bn as a condition of completing its merger with WorldCom, also of the US.
Rich Yalen, chief executive of C&W USA, said the acquisition catapulted the UK group to the world's number one internet provider measured by traffic flows.
He added the company was about to launch its first ever newspaper advertising campaign in the US costing many millions of dollars in a bid to ensure visibility for the C&W brand.
He said: "C&W is immediately positioned to grow the business via strategic affiliations and valuable partnerships. We are on track and ready to grow."
The group has two years to move from MCI's facilities to its own and Mr Yalen said he was considering all options including further acquisitions in the US and the purchase of transmission fibre.
He said the group would be announcing various new internet products in the next few weeks as well as contracts with new and existing customers.
C&W has a two-year window of opportunity in the US when the terms of the MCI sale forbid the US company to compete with it.
It intends, therefore, to sell MCI's internet customers advanced services including data transmission technologies such as frame relay.
Mr Yalen said most of the 1,200 former MCI employees who were moving across to C&W were happy with the deal: "They know they are going to set out direction in the global internet business," he said.
Meanwhile, British Telecommunications, which paid $7bn for its stake in MCI, has no immediate plans either to make further investments or return the cash to shareholders.
It has made a net œ1bn ($1.7bn) pre-tax profit on its MCI investment and intends for the moment to use the cash to reinforce its already strong balance sheet.
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