Bradford's Bacurin on MCI WorldCom Purchase of SkyTel: Comment
Bloomberg News
May 28, 1999, 6:23 p.m. ET
Nashville, Tennessee, May 28 (Bloomberg) -- Mark Bacurin,
telecommunications analyst at J.C. Bradford & Co., comments on
No. 2 U.S. long-distance phone company MCI WorldCom Inc.'s
agreement to buy No. 2 U.S. paging company SkyTel Communications
Inc. for $1.8 billion in stock and debt. Bacurin rates MCI
WorldCom ''strong buy.''
MCI WorldCom owns ''UUNet, which is the largest Internet
service provider in the world. What SkyTel can really give them
is a wireless extension of some of their Internet capabilities.
''A big cost to SkyTel is the cost of buying communications
network capacity from companies such as (MCI) WorldCom.'' Now
SkyTel won't have to do that, he said.
In addition, because both companies are based in Jackson,
Mississippi, there probably will be some headquarters
consolidation, cutting costs, he said.
On whether MCI will make more wireless acquisitions: ''I
think it's inevitable that they will. You're increasingly seeing
more and more long-distance minutes traveling on wireless
networks.
''SkyTel definitely doesn't solve their wireless voice
communications needs. It's a narrowband network and you really
need broadband to do voice'' and emerging Internet applications.
''It'll be a nice extension of their communications
capabilities. MCI WorldCom is building itself to be one of the
dominant communications companies in the world. It is going to be
one of several players that can offer the full suite of
communications products.''
On the price and terms of the purchase: ''If you can do it
additive (to earnings) and acquire a company in your backyard,
all the better.''
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