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To: Carter Patterson who wrote (2711)	6/23/1998 12:20:00 PM
From: Anthony Wong	Read Replies (1) \| Respond to of 11568

Cable & Wireless in Talks to Buy MCI's Internet Business Bloomberg News June 23, 1998, 11:09 a.m. ET Cable & Wireless in Talks to Buy MCI's Internet Business New York, June 23 (Bloomberg) -- Cable & Wireless Plc Chief Executive Richard Brown said the second-biggest U.K.-based phone company is in talks to buy the Internet assets MCI Communications Corp. must shed to get regulatory approval to sell the company to WorldCom Inc. ''Cable & Wireless is in discussions with MCI right now about whatever it is they may need to sell to satisfy regulators,'' Brown said. ''We remain highly interested and we are pursuing with MCI in great earnestness discussions about the possible acquisition of this asset base.'' Yesterday, the European Union agreed to approve WorldCom's proposed $44.0 billion purchase of MCI, the No. 2 U.S. long- distance company, after MCI said it will sell its Internet business. Cable & Wireless agreed last month to buy MCI's wholesale Internet operations, which carries traffic for other Internet service providers, for $625 million in cash. When that failed to stem regulatory opposition, MCI offered to sell all of its Internet businesses and said it will shed its consumer and business customers. The European Commission, the EU's executive agency, will hand down its formal approval on July 8 with U.S. regulators expected to give their blessing soon after. MCI is likely to wait until it gets the regulatory green light before unveiling a buyer for the Internet operations. MCI and WorldCom, the No. 4 U.S. long-distance company, expect to complete the purchase this summer. That would create the second-largest U.S. phone company behind AT&T Corp. MCI WorldCom will control about a quarter of the $70 billion-a-year U.S. long-distance market and offer local services in more than 100 cities. Cable & Wireless rose 11 pence to 661 pence. Jackson Mississippi-based WorldCom rose 7/16 to 48. Washington-based MCI rose 9/16 to 57 1/2. --Colleen McElroy in New York with Alison Jahncke in the Brussels

To: Carter Patterson who wrote (2711)	6/30/1998 1:46:00 PM
From: shoe	Read Replies (2) \| Respond to of 11568

I think it behooves use to take a closer look at Forbes article "Grand illusions" in the July 6 issue (couldn't find it on the web site). I agree that MCI's customer base is important, but if phone service is a commodity product, Qwest et. al. can make inroads on MCI's market share just as MCI did on AT&T's. Some quotes from the article: Worldcom's bid was a rich 3.3 times MCI's $11 billion book value....Ebbers is buying a stumbling hulk of a company that lost its way since founder McGowan developed heart disease in the late 1980s....Roberts and Taylor have spent close to $10 billion...on ventures like local service, on-line movies and news, which now contribute little to the bottom line. MCI's return on capital peaked in 1989 at 18% and has since tanked to 1.1%. real crux of the problem: 3/4ths of MCI's $20 billion in revenues last year came from plain old voice calls, over a circuit switched network second in age only to AT&T's. [MCI's avg. charge is 12.5 cents a minute vs. Qwest's 7.5 cents. 7.5 cents applied to MCI's call volume would reduce MCI's phone revenues from $15 to $9 billion.] ...But if Ebbers gets MCI, some 65% of revenues will suddenly come from old-fashioned phone calls. [maybe internet traffic will compensate?] [Packet-switching is the technology of the future. Sprint put its obsolete circuit-switching equipment on the scrap heap.] [Cost for MCI to shift to a Sprint-like network will be enormous and disruptive to customers. Sprint spent $2 billion over 5 years to install a high capacity packet network. MCI will have to replace its plant quickly to keep up with competition. For example, AT&T took a $7 billion write-down in 1988 to digitize its network.] Worldcom was one of the first carriers to deploy dense wave-length division multiplexing that greatly increases the amount of traffic an existing fiber-optic cable can carry. [WCOM and Sprint funded development of same at Ciena.] In May, Worldcom announced it would delay a $45 million order from Ciena, at the same time Sprint is boosting its Ciena orders. ...How will Ebbers come up with the rosy $12 billion cash flow he has led securities analysts to expect from the merger? etc. etc. Your comments? Thanks