MCI WorldCom bought bonds of fixed wireless firms
Monday, March 29, 1999 06:44 PM
NEW YORK, March 29 (Reuters) - MCI WorldCom Inc. (Nasdaq:WCOM) , the No. 2 U.S. long distance company, recently spent about $200 million to $300 million to buy bonds of several small wireless cable companies, sources familiar with the situation said Monday.
The move is seen as a step by MCI WorldCom toward gaining access to the cable companies' so-called fixed wireless technology. This technology would allow MCI WorldCom to bypass the local phone companies' networks and to directly connect its national communications network to its customers, sources and analysts said.
MCI WorldCom last week purchased bonds and equity issued by CAI Wireless Systems Inc. and bonds issued by CS Wireless, People's Choice TV Corp. and Wireless One Inc. , sources said.
MCI WorldCom purchased the bonds and stock from Merrill Lynch and Moore Capital. MCI WorldCom and Merrill Lynch declined to comment. Moore Capital could not be immediately reached for comment.
The cable companies control wireless spectrum called MMDS (multichannel multipoint distribution service), which uses microwave frequencies to provide television service.
Technological difficulties and production problems hobbled the wireless cable industry's efforts to successfully compete against the traditional cable television providers.
While many of these companies filed for bankruptcy, their wireless spectrum is still valuable to long distance companies such as MCI WorldCom, which are searching for ways to directly connect to their customers, analysts said.
MCI WorldCom could use the wireless technology as the so-called "last mile" to bridge the gap between its long distance communications network and its customers. The Baby Bell phone companies control the connections directly into homes and businesses.
If MCI WorldCom controlled the wireless licenses, it could bypass the Baby Bell's local networks and avoid the costly access fees it must pay the local phone companies.
MCI WorldCom's purchase of the bonds was first reported on cable television stations CNBC.
Shares of MCI WorldCom gained $2.625 to $92.50 on Nasdaq. |
