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To: Allen Furlan who wrote (2202)	3/4/1998 3:56:00 PM
From: Teddy	Respond to of 11568

Dow Jones Newswires -- March 4, 1998 Scrutiny In Europe Not Seen Thwarting WorldCom/MCI Deal By Shawn Young NEW YORK (Dow Jones)--Additional scrutiny by European regulators may dash hopes of an early closing for the proposed $37 billion merger between WorldCom Inc. (WCOM) and MCI Communications Corp. (MCIC), but it isn't likely to block the deal, U.S. analysts said. The European Commission, which must approve the deal along with U.S. regulators, said Wednesday it will extend its inquiry into the merger by four months because of concerns about how much of the Internet data transmission backbone the combined company would control. WorldCom, based in Jackson, Miss., and MCI, Washington, D.C., said in a press release they remain confident their deal will be approved in time for it to close in the middle of the year. Meeting that tight schedule remains possible, Wall Street analysts said, but some are skeptical the companies can jump all the regulatory hurdles in time. Any hope of an early closing has vanished, they said. "I've felt the company was a bit aggressive in targeting mid-year," said Goldman Sachs & Co. analyst Richard Klugman. "I'm not surprised that regulators are concerned," he said, "but ultimately I think the companies will be able to prove that this is too dynamic a market for any one company to control." Other analysts agreed the Internet issues aren't deal-killers. They can be resolved without much financial impact, analysts said. "Mostly it's a timing setback," said Stephanie Comfort, an analyst at Morgan Stanley Dean Witter. She said she still thinks a mid-year closing is possible. WorldCom and MCI might have to make concessions to European or U.S. regulators to satisfy their concerns about the combined company's large share of the Internet backbone, analysts said, but it's too early to tell what form those concessions might take. They could take extreme forms, such as rate givebacks or divestiture of assets. More likely, said Morgan Stanley's Comfort, they would take the form of agreements designed to keep the backbone accessible. Klugman of Goldman Sachs said he's sure the topic of concessions will come up, but access agreements might not make sense because WorldCom/MCI would not constitute a monopoly that must be forced open, as has been the case with the regional Bell companies in the U.S. GTE Corp. (GTE), of Stamford, Conn., has opposed the MCI-WorldCom merger both in the U.S. and abroad since WorldCom topped its offer to buy MCI. GTE hasn't officially withdrawn its offer for MCI. GTE spokesman Bob Bishop said the European Commission's action casts doubt on the closing date of the merger and may presage tough questions to come from U.S. regulators. "There is growing concern about the anticompetitive aspects of the merger," Bishop said. The merger will be the largest corporate combination ever, so regulatory delays, while not necessarily fatal, are quite possible. The U.S. Department of Justice took more than a year to approve the merger of local phone behemoth Bell Atlantic Corp. (BEL) with Nynex Corp. The department already has indicated it's interested in the combined company's share of the Internet market. State regulators, especially in California, could also set up tough hurdles, analysts said. In addition to its scope in the Internet market, MCI WorldCom, as it is to be called, will have about 25% of the U.S. long-distance market. While that could be enough to raise red flags in Washington, regulators' concerns could be balanced by the fact that MCI WorldCom will greatly increase competition in local markets, at least for business customers. Also, regulators foresee increasing competition in the long-distance business over the next few years as the local Bells get permission to join the fray. Shares of WorldCom and MCI were off slightly in moderate trading midday Wednesday. -Shawn Young; 201-938-5248

To: Allen Furlan who wrote (2202)	3/4/1998 4:15:00 PM
From: SecularBull	Read Replies (1) \| Respond to of 11568

WCOM is not trading much higher than it was when the merger was announced. In fact it went down slightly after the announcement. I own Jan 99 calls that I held two weeks before the announcement, and I'm still underwater in some of them. Between BT and WCOM, MCIC has had a speculative jolt. I thought about swapping the WCOM calls for MCIC, but determined that WCOM was a winner with or without MCIC. Is MCIC a winner without WCOM? I don't think so.