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

To: Chadick who wrote (4430)	5/6/1999 1:25:00 PM
From: Tradelite	Read Replies (2) \| Respond to of 11568

News story indicates WCOM has alternatives to NXTL....also, read below how much it would affect WCOM profits to acquire and upgrade NXTL facilities! ___________________________ MCI WorldCom, Nextel Unable to Agree on Takeover By Sarah Schafer Washington Post Staff Writer Thursday, May 6, 1999; Page E01 MCI WorldCom Inc., the nation's second-largest long-distance telephone company, has ended talks to acquire wireless firm Nextel Communications Inc. of McLean after the companies failed to reach an agreement on price, sources familiar with the discussions said yesterday. Neither Nextel nor MCI WorldCom, which is based in Jackson, Miss., would comment. The negotiations, which reportedly began about a month ago, were never confirmed by the companies. Analysts said MCI WorldCom executives determined that in addition to the cost of the acquisition they would need to make a significant investment to upgrade and expand Nextel's wireless network. Analysts said the acquisition alone could have cost MCI WorldCom up to $13 billion. While MCI WorldCom has been searching for an entree into the wireless market, analysts said that what had appeared a logical solution with Nextel began to look less attractive. "It's an issue where the [return on investment] was pretty bad," said Frank Dzubeck, president of Communications Network Architects in Washington, a telecommunications consulting firm. The company would have needed to revamp Nextel's infrastructure to handle data as well as voice, something AT&T Corp. plans to do with its network in the next few years. Analysts said it is unlikely that Nextel and MCI WorldCom will revive the talks. On reports of the halt in negotiations, MCI WorldCom stock rose 8 percent to close yesterday at $89.62 1/2 on the Nasdaq Stock Market. The stock has languished since news of the talks broke several weeks ago. Nextel shares lost $1.18 3/4 to close at $37.87 1/2 in Nasdaq trading. A Nextel acquisition would have filled what some analysts said is a hole in MCI WorldCom's service portfolio. Nextel is the last independent U.S. wireless firm with a national network, and MCI WorldCom's main competitors -- AT&T and Sprint Corp. -- have healthy wireless businesses. As a result of the failure of the talks, MCI WorldCom will need to develop another wireless strategy, analysts said. Options include building its own wireless infrastructure, or aligning with a former Bell operating company, Dzubeck said. "They need a wireless play," said Mark Lowenstein, a senior vice president for global wireless services at the Yankee Group, a Boston-based consulting firm. "Nextel has been the most obvious [solution]." For Nextel, access to MCI WorldCom's coffers would have provided much-needed capital for expanding its network, which is crucial to the company's growth hopes. Though a Nextel purchase would have solved some strategic concerns for MCI WorldCom, it would have come with some baggage. The acquisition likely would have dragged down MCI WorldCom's profits by about 25 percent while the company digested the deal, analysts estimated. Nextel has achieved positive operating cash flow, an important measure of a company's strength in the wireless industry, but the firm has not become profitable; it reported a loss of $1.8 billion for 1998. Nextel also has $7.7 billion in long-term debt. MCI WorldCom chief executive Bernard J. Ebbers has been aggressively working to streamline the company and to avoid actions that would reduce the company's long-term earnings. The long-distance giant could consider cobbling together a wireless network by acquiring companies such as Omnipoint, which has a wireless network in the Northeast, although that is a less likely scenario, analyst Lowenstein said. Nextel will likely have other suitors, Lowenstein said, adding, "I think [Nextel] has solid enough organic growth to continue to build the network." Meanwhile, Nextel faces growing competition as the bigger telecommunications players offer similar services. Still, "I think Nextel can wait until there's a good deal," Lowenstein said. © Copyright 1999 The Washington Post Company

To: Chadick who wrote (4430)	5/6/1999 11:14:00 PM
From: John Coltrane	Read Replies (1) \| Respond to of 11568

Hello Fred, Thank you for filling the GTE whole for me. Difficult to keep track of everything let alone regurgitate it all. Since the announcement I really haven't thought much about the merger until the last couple of days, to my chagrin. As you may know, most recently BEL has applied in several states for the right to offer long distance service. New York and Pennsylvania come immediately to mind. In New York a hearing date had been set for June 24, but has been postponed for a month in order that the potential merger be given full attention. BEL just might be the first RBOC allowed to do Long Distance. They are the only RBOC to make to the final step in the regulatory approval process. Though, IMO, BEL is going to be rejected. In New York there isn't any true residential competition though the xdsl/PCLEC bandwagon has arrived in town, but from what I've gleaned BEL's required CO policies and cooperation while much improved is still spotty at best. So, my guess is they'll be rejected (last ditch effort just to see what they can get away with), clean up they're act VERY quickly and gain approvals within 12 months. Did you see today's news re WCOM providing "Local Toll Call" service in several states, the majority of which is BEL's territory. Maybe BEL can play this up and get approval in this round. Enough of all that, lets get back to GTE. Very interesting! I wonder if the golden nugget can be seen through the obvious?? Most likely, the merger will get approval either outright or with conditions. Either way BEL will come away with what they need, the golden nugget---BBN!!!! In other words, "Internet Backbone", all the rest of GTE is extremely good gravy. The problem from a WCOM point of view is that it positions BEL to better compete in an area that WCOM might be considered to have the edge in UUNET plus. This falls into the mostest category. Here's a couple of interesting articles, Rival MCI Worldcom's Domain Growing losangelestimes.com The Player Now Its Time to Make It All Work, Says AT&T Chief losangelestimes.com