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To: Anthony Wong who wrote (2465)	5/19/1998 8:29:00 AM
From: S. HYDER	Read Replies (2) \| Respond to of 11568

biz.yahoo.com

To: Anthony Wong who wrote (2465)	5/20/1998 2:44:00 PM
From: Anthony Wong	Read Replies (1) \| Respond to of 11568

WorldCom May Yield on Internet, EU Official Says Bloomberg News May 20, 1998, 11:15 a.m. PT WorldCom May Yield on Internet, EU Official Says Brussels, May 20 (Bloomberg) - WorldCom Inc. and MCI Communications Inc. may be ''prepared'' to make concessions to satisfy European Union concerns that their proposed $41.8 billion combination will dominate too great a share of global Internet traffic, EU Competition Commissioner Karel Van Miert said. MCI is soliciting offers to sell its Internet ''backbone,'' or wholesale business, in a bid to win EU and U.S. regulatory approval, a person familiar with the sale said yesterday. The sale of the business, MCI's Internet ''backbone,'' could speed regulatory approval of the sale, analysts said. European antitrust authorities said they were concerned WorldCom's proposed acquisition of MCI would hamper competition in the market for transmitting information through the Internet. European Commission hearings last week confirmed ''our position and our concerns,'' Van Miert said. ''The next question is when the companies, WorldCom and MCI, will offer the proper remedies. I think they're prepared to do so,'' he added, giving no details. WorldCom had no comment, and MCI spokesman Frank Walter said the company will ''continue to have a dialogue with the EC.'' He wouldn't describe the nature of the discussions. The deadline for the companies to offer concessions is June 15, and the EC's deadline for ruling on the acquisition is mid-July. MCI's shares fell 11/16 to 51 5/16, and WorldCom's shares slipped 13/32 to 44 1/8 in midday trading. 'Backbone' on Block WorldCom's proposed acquisition of MCI also needs the approval of the U.S. Justice Department and Federal Communications Commission. The companies said they expect the transaction to be completed this summer. ''The management at MCI realizes that it's more important to get the deal done that to keep it tied up in a protracted battle,'' said Jeffrey Kagan, president of Atlanta-based Kagan Telecom Associates, a telecommunications market research firm. Market researcher Gartner Group estimated that the combined MCI-WorldCom would carry more than 50 percent of Internet traffic; the companies disagree, saying they account for 21 percent of worldwide revenue for Internet access. ''The argument over controlling the Internet is a ridiculous, paranoid fear anyway,'' Kagan said. MCI can shed its Internet unit, and then turn around and build it back up just like any other company can, he said. The unit, which carries other companies' Internet traffic, could sell for about $500 million, the person familiar with the sale plan said. Potential bidders could include British Telecommunications Plc and GTE Corp., both of which made offers for MCI last year, but were outbid by WorldCom, the person said. WorldCom's rivals cite the company's purchase of UUNet Technologies Inc. as one of the moves that have given the company a dominant position in Internet services. 'Dicey Negotiation' ''This (MCI) deal can get done, it's just a dicey negotiation because both sides' preferred options are different,'' said Scott Cleland, managing director of Legg Mason Inc.'s Precursor Group. MCI would prefer to divest MCI's Internet backbone, whereas the regulators prefer a divestiture of UUNet, Cleland said. That's because MCI's Internet backbone is essentially the same as its long-distance network. Regulators are worried that a MCI divestiture would ''be more cosmetic than structural,'' Cleland said. WorldCom, which agreed in November to buy MCI, further strengthened its Internet business this year by purchasing the network services units of CompuServe Corp. and America Online Inc. Separately, British Telecommunications Plc said it'll sell its remaining two U.K. cable franchises as one of several concessions it'll make to win European Union approval for its digital interactive TV venture with British Sky Broadcasting Group Plc and others. --Alison Jahncke in Brussels (32-2) 285-4300 and Heather Fleming