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Technology Stocks : WCOM -- Ignore unavailable to you. Want to Upgrade?

To: dougjn who wrote (2528)	6/5/1998 3:27:00 PM
From: Anthony Wong	Read Replies (1) \| Respond to of 11568

MCI-WorldCom deal seen closing after minor changes Friday June 5, 3:00 pm Eastern Time By Jessica Hall NEW YORK, June 5 (Reuters) - WorldCom Inc.'s (WCOM - news) proposed acquisition of MCI Communications Corp. (MCIC - news) is expected to face only minor changes before closing despite a European regulator's latest hope the two companies will make further moves to divest Internet assets. ''I don't think it will get stopped. They (regulators) may put some requirements on them (MCI and WorldCom) as far as service guarantees or service availability, but I think it will ultimately go through,'' said Kevin Gooley, a telecommunications analyst with Standard & Poor's Personal Wealth. MCI last week proposed selling Internet backbone business to Britain's Cable and Wireless Plc (quote from Yahoo! UK & Ireland: CW.L) for $625 million, a proactive move to secure regulatory approval of its $37 billion purchase by WorldCom. Critics contend the proposed MCI-WorldCom deal, the second largest in the telecommunications industry, will harm competition in the Internet business. GTE Corp. (GTE - news), which lost in last fall's international bidding war for MCI, also contends that the combined company would harm competition in the long distance market. GTE filed a lawsuit last month to block the MCI-WorldCom deal. The European Union's competition commissioner Karel Van Miert said Friday the two companies had not done enough yet to appease antitrust concerns, but was confident regulators would be about to ''sort things out'' with MCI and WorldCom. ''Yesterday, the Department of Justice and our officials told the companies concerned that the offer as it was being registered was not completely meeting our concerns,'' Van Miert said Friday after a speech at the Economic Strategy Institute. Van Miert said the EU had told the companies originally that WorldCom could meet the commission's concerns by divesting itself of UUNet, a large Internet backbone provider, but the company decided against it. Having offered to divest the Internet backbone business, MCI and WorldCom now have limited room to maneuver without carving into crucial pieces of their business, analysts said. ''MCI wanted to get this over with and went to the max. I'm stunned that it's still not enough,'' said Jeffrey Kagan of consultancy Kagan Telecom Associates. ''I don't know what else they (MCI and WorldCom) can do,'' said Christine Heckart, a vice president with consultancy TeleChoice. ''I think (the EU) is asking too much and expecting too much and that the motivation is wrong,'' Heckart said. Heckart and others industry experts suggested the EU may be trying to protect their own European monopolies from a nimble, aggressive company like WorldCom. ''It appears that the stated concern (about possible Internet dominance) is not the real concern. The real concern is that they are trying to protect their own local markets and monopolies,'' Heckart said. The EU may be taking a hard line on MCI and WorldCom to show that they are not merely rubber-stamping each merger proposal that crosses their desk, analysts said. Others suggest that regulators are lost in the new, fast growing business of the Internet business, where the traditional measures of marketshare are harder to apply. Industry experts said it would not be fair to force WorldCom to divest its assets such as UUNet or ANS, the network service assets it acquired from America Online Inc (AOL - news) last year, since WorldCom is allowed to hold those assets today, analysts said. Regulators should be examining only the overlap between MCI and WorldCom business and not looking at WorldCom's current assets, analysts said. ''If MCI divests the backbone business, the combination of MCI and WorldCom is not more powerful than WorldCom is right now,'' said one analyst who declined to be named. MCI declined to comment specifically about the EU's statements. But MCI spokesman Jim Monroe said the company generally ''continues to believe that the sale of MCI's Internet backbone business to Cable & Wireless addresses the only antitrust issue that has been raised,'' said MCI spokesman Jim Monroe. WorldCom representatives could not be reached for comment. Van Miert's comments are ''clearly signaling that what MCI announced last week -- to give the appearance of a divestiture by selling some minor Internet assets -- just isn't going to fool them,'' said GTE spokesman Bob Bishop. Shares of MCI fell 1-5/8 to 50-3/4, while WorldCom eased 6/16 to 44-11/16, both in heavy Nasdaq trading.