Cable & Wireless sued MCI WorldCom on Internet deal
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NEW YORK, March 31 (Reuters) - British telecommunications company Cable & Wireless Plc (quote from Yahoo! UK & Ireland: CW.L) on Wednesday sued MCI WorldCom Inc. (Nasdaq:WCOM - news), alleging the No. 2 U.S. long distance company violated the terms of an agreement to sell its Internet business.
MCI Communications Corp., to gain regulatory approval for its $40 billion acquisition by WorldCom Inc., sold its Internet assets last September to Cable & Wireless for $1.75 billion.
In the lawsuit, Cable & Wireless alleged the combined MCI WorldCom failed to effectively transfer MCI's Internet customers, hindered Cable & Wireless' ability to operate the Internet business and targeted former MCI Internet customers for marketing promotions.
Cable & Wireless contended it has lost a number of Internet customers, as well as revenue and marketing opportunities.
Cable & Wireless said it also incurred significant recruiting costs to fill staffing positions that MCI WorldCom failed to transfer. The company said it had to divert staff from other areas of its business to fill the staffing gap.
Jackson, Miss.-based MCI WorldCom said it could not comment on pending litigation.
The lawsuit, filed in Federal Court in Delaware, seeks unspecified monetary damages and other relief.
''Cable & Wireless has met with, and remains willing to meet with, MCI WorldCom to try to resolve differences and reach a negotiated settlement,'' Denny Matteucci, chief executive officer of Cable & Wireless USA, said in a prepared statement.
''At the same time, however, we have filed the lawsuit to protect the interests of our customers, shareholders and employees. We have an obligation to pursue all available avenues,'' he said.
MCI last year agreed to divest its Internet business to calm regulators' concerns that the combined MCI WorldCom would dominate the Internet market.
Under the terms of that agreement, MCI sold its wholesale Internet business, which connected 1,300 smaller Internet service providers to the Net, and its retail business with 250,000 consumer and 60,000 businesss customers.
MCI also agreed to transfer 1,000 employees to Cable & Wireless and said it would not try to woo back any customers for up to two years.
WorldCom was allowed to keep its UUNet Internet business, which serves business customers. In February, the combined MCI WorldCom launched a new Internet service for consumers.
Shares of MCI WorldCom fell $3.56 to $88.56 on Nasdaq. Cable & Wireless' American Depositary Receipts lost 56 cents to $36.94 on the New York Stock Exc |
