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To: jim black who wrote (2492)	5/28/1998 5:18:00 AM
From: Anthony Wong	Respond to of 11568

Cable & Wireless May Pay $600 Million For MCI's Internet Assets May 28, 1998 1:47 AM By Jared Sandberg, Staff Reporter of The Wall Street Journal NEW YORK -- MCI Communications Corp. is nearing a deal to sell its wholesale Internet business to Cable & Wireless PLC of Britain for more than $600 million in cash, an effort to appease European regulators who have raised objections to the $37 billion merger of MCI and WorldCom Inc., people familiar with the talks said. An MCI-WorldCom combination would be the most potent player on the Internet. MCI was an early Internet pioneer and today operates one of the major arteries of the global computer network known as the backbone. It is second only to WorldCom's UUNet Technologies division in offering high-speed Internet connections. That potency is what raised the hackles of European regulators, who have determined that together the two companies would control more than half of the Internet's backbone traffic. European regulators are demanding the sale of one of the companies' Internet businesses, according to government officials, not a partial sale of Internet-related assets. But the sale price of MCI's Internet business, which is expected to range between $600 and $700 million, raises the question of exactly what Internet assets are involved -- and whether the divestiture would be sufficient to appease regulators. Outspoken critic of the deal, rival GTE Corp., submitted letters to the Justice Department from investment bankers who put a price tag on MCI's Internet business in excess of $4 billion. The disparity may draw close scrutiny by regulators. The last-minute shuffling of the two companies' assets also might prolong the review process as regulators pick apart the implications of the sale. MCI and WorldCom declined to comment. Cable & Wireless officials couldn't be reached for comment. If MCI sells part of its Internet business, regulators also may be concerned that the unit's big customers might simply return to WorldCom/MCI and the combined companies could be subject to restrictions on trying to win those customers back. MCI and WorldCom had to strike a delicate balance in preparing to sell part of their Internet business. On the one hand, they need to satisfy regulators. But on the other hand, they wouldn't want the business to fall into the hands of a formidable competitor, such as AT&T Corp., which could threaten the ongoing Internet business of MCI-WorldCom. PSINet Inc., a Herndon, Va., Internet provider, said it approached WorldCom and MCI about buying the Internet business, but didn't get far. "We have expressed interest, but it's our belief that they are looking for a buyer who, when they owned the asset, wouldn't be a threat to their business," said William L. Schrader, chairman and chief executive of PSINet. But antitrust enforcers may not permit that to happen because a sale to a viable competitor would likely be a requirement by the Justice Department to permit the MCI-WorldCom merger to go forward. Other companies said to have made MCI's short list of potential suitors include IXC Communications Inc. and Williams Cos., according to a person familiar with the discussions. Both build and operate networks used on a wholesale basis by Internet providers, but don't operate Internet services themselves. Foreign companies, which have typically taken a back seat to Internet powerhouses traditionally centered in the U.S., were also said to be a suitable acquirer for MCI's business. Cable & Wireless, which has comparatively sparse Internet offerings, particularly fits the bill. The company, founded to provide phone service to the British Empire's far-flung colonies, operates relatively small Internet services in Australia, Hong Kong and the United Kingdom. It faces an enormous gap in its efforts to become a global telecom player: Namely, the U.S. is where 30% of international phone traffic originates and where 40% of multinational customers are based. The company has a little-known long-distance resale business in the U.S. and is keenly interested in raising its American profile. It has held talks in recent months with AT&T and Bell Atlantic Corp. to strike an alliance. An MCI accord could give Cable & Wireless's chairman, Richard Brown, a former Ameritech, Sprint Corp. and CompuServe Corp. executive, a major boost in his efforts to lift the company from relative obscurity to a major presence on the global telecommunications landscape. --- Gautam Naik in London contributed to this article. Copyright (c) 1998 Dow Jones & Company, Inc. All Rights Reserved.

To: jim black who wrote (2492)	5/28/1998 9:24:00 AM
From: Frank A. Coluccio	Read Replies (1) \| Respond to of 11568

Jim, see me post in the MCI thread that speaks to your question. I asked knowledgeable lurkers and thread participants for the answers to this, but nadda. I also posted it in Compuserve's telecomm forum and received the same reply. Nothing. Maybe it is just too convoluted a problem to unravel, this thing that Bernie put together. Message 4522733 The ramifications of a spinnoff or sale of UUNet could have its origins in many different motivations, I suppose. It could be argued that UUnet's infrasturcure represents old news, technology that has seen its day. Of course, existing accounts and business ties are the issue here. But new LEAF technology can be installed along existing ROWs by WCOM to build anew, one would think, while shedding yesterday's burdensome single mode that has its limitations in capacity. Just some thoughts... Frank Coluccio