Posted: 12/1997
MCI: More Changes Imminent
WASHINGTON--Those holding their breath to see what the second largest long distance provider would do with three attractive buy offers on the table can now exhale.
Unanimous approval by both MCI and WorldCom boards of directors and public announcement have taken WorldCom, Jackson, Miss., and MCI, Washington-- "the most coveted communications company in town in recent days," according to WorldCom President and CEO Bernard J. Ebbers--one step closer to completion of a $37 billion merger that will mean the creation of MCI WorldCom. The deal will be accounted for as a purchase and will be tax free to MCI shareholders. It is expected to be accretive to WorldCom's earnings by about 20 percent in the first year after closing.
All that remains for creation of the mega-carrier is approval by various U.S. regulatory agencies and review by the European Commission. MCI and WorldCom anticipate the merger will close within nine months.
Ebbers, who becomes MCI WorldCom's president and CEO, says the combined companies plan "to go after the local market with a vengeance."
WorldCom has pretty much gone after several telecom market sectors with a vengeance with about 40 acquisitions in the past five years that include the likes of MFS Communications, UUNET Techno-logies, CompuServe, America OnLine Network Services, Brooks Fiber Properties and now, MCI.
MCI accepted WorldCom's increased offer of $51 a share from an earlier offer of $41.50 a share in WorldCom stock that will be paid to all shareholders other than British Telecommunications PLC (BT). BT, which holds a 20 percent interest in MCI, will be cashed out. "It removes the overhang of having a large shareholder in the marketplace that could subsequently sell stock," said WorldCom CFO Scott D. Sullivan, who will serve as CFO for the merged companies. GTE also had made a bid for MCI, offering $28 billion or $40 a share in a cash bid that would have created a company with about $40 billion in annual revenues. Roberts said GTE did not make a counter offer.
BT will receive $7.4 billion in cash for its MCI shares and $465 million in exchange for its broken deal with MCI, a move BT shareholders approved. MCI shareholders will own about 45 percent of the merged company with WorldCom owning about 55 percent.
TMC to Provide Energy, Too
SANTA BARBARA, Calif.--TMC Communications announced it will join the coming energy revolution when electric utilities become deregulated in January 1998. The new firm will be called TMC Energy Inc.
"Californians have seen their long distance telephone bills drop by over two thirds following the deregulation of phone service. We expect TMC Energy will give them the same large drop in their energy bills," said TMC Communications Chair John Marsch.
ELI Builds Backbone to Bypass Internet Congestion
SACRAMENTO, Calif.--Electric Lightwave Inc. (ELI) announced plans to expand its Internet network into San Francisco and Los Angeles. ELI has "built private onramps to the Internet," said Dave Gilbert, Internet product manager for ELI. "Our strategy has been to avoid official network access points (NAPs). To me, using NAPs is like using the onramps to the highway at rush hour." ELI has secured private interconnect points with carriers such as MCI, Sprint and UUNET to avoid sluggish connections.
RELTEC Expands Services Arm
CLEVELAND--RELTEC Corp. announced it will acquire Custom Design Telephone Systems Inc. (CTDS), an independent provider of integrated telecommunications services. Obtaining the firm "adds to and expands the comprehensive capabilities we possess today within our RELTEC Services business," said Dudley Sheffler, president and CEO of RELTEC.
RELTEC Services is the company's turnkey program management, consulting, engineering, furnishing, installation and training arm. CTDS brings to the company a line of telecommunications systems design, installation and maintenance services offered by the Infrastructure Group and Interconnect Group.
LCI International Purchases New Fiber Route
MCLEAN, Va.--LCI International has agreed to purchase a position in a 1,925-mile fiber optic cable between Washington and Dallas from Williams Communications Group Inc. With this purchase, LCI will own more than 7,000 fiber miles of network capacity.
LCI officials expect to begin moving traffic off its leased facilities onto portions of the new route beginning in the second quarter of 1998.
LDI to Resell Prepaid Wireless
FORT LAUDERDALE, Fla.--Long Distance International's new wireless division, LDI Wireless, has signed a resale agreement with GTE Wireless.
GTE will provide LDI with a seamless cellular service, which does not use smart phones or 800 numbers to access the service. LDI Wireless will launch a bill-free, prepay cellular service in Tampa, Fla., Houston and San Diego. Customers will be able to prepay cellular airtime in 30-minute, 60-minute and 90-minute increments. LDI intends to launch its bill-free cellular and personal communications services nationwide in 1998.
Frontier Restructures, Sells Prepaid Business
ROCHESTER, N.Y.--Joseph Clayton, president and CEO of Frontier, recently announced the company's intention to divest product lines and businesses which are not critical to its long-term growth.
In light of this intention, Frontier will sell its retail prepaid calling card business to SMARTALK Teleservices Inc. for $35 million. "Product lines that distract from our core business and inefficiently utilize our resources can no longer be part of our business portfolio," said Clayton. "Frontier has been successful in securing prepaid accounts with Fortune 500 retail companies. But I believe we lack the retail savvy and critical mass to make this a core competency. With our principal focus on the business market, these retail card accounts will be better served by SMARTALK."
More Companies Line Up for Qwest's Dark Fiber Network
DENVER--Qwest Communications has signed five sales agreements totaling about $90 million to provide capacity on its dark fiber network to third parties.
Although Qwest would not disclose the names of the companies, it did say they included a telecommunications service provider, an Internet service provider, a local exchange carrier and other telecommunications companies.
ICG, NETCOM Plan Merger
ENGLEWOOD, Colo.--ICG Communications Inc. and NETCOM On-Line Communication Services Inc. entered an agreement to merge the companies. The merger would create a business communications company providing a single source for voice, data, Internet, web hosting and other communications services over an extensive fiber optic network.
Saville, Oracle Team Up
LOS ANGELES--Saville Systems recently announced it has teamed up with Oracle Corp. Saville will combine its customer care and billing platform with Oracle's universal data server to give telecom service providers the flexibility to add new products and services to their offerings without sacrificing Saville's software's business functionality. As a member of the Oracle Alliance program, Saville will receive technical support to help it integrate its Convergent Billing Platform with the Oracle Universal Server. In turn, Saville will provide Oracle with access to the convergent billing and customer care market.
US WEST to Split Media Group, Communications Group
ENGLEWOOD, Colo.--US WEST Inc. recently announced it will split US WEST Media Group and US WEST Communications Group into separate public companies next year. This move to create two independent companies will allow both groups to focus on developing the full potential of their respective distribution networks.
US WEST Communications Group will be renamed US WEST Inc. The new US WEST will include the telephone, data and wireless operations of the Communications Group, as well as the Yellow Pages and electronic directory business known as US WEST Dex.
US WEST Media Group will be renamed MediaOne Group Inc., echoing the brand by which the company's cable distribution system is known. MediaOne Group assets will include the company's interests in the Time Warner Entertainment partnership, the wireless operations of US WEST New Vector Group and all of US WEST's international interests and interactive services.
Highland Lakes Supplies CAS to New Global
AUSTIN, Texas--Highland Lakes Software Inc. announced its agreement with New Global Telecom of Golden, Colo., to provide its communications accounting system (CAS). CAS offers the international marketplace flexible call rating capability, multilingual support and the experience of servicing telecommunications firms around the world.
"New Global Telecom is a major International carrier's carrier," said Dennis Kilebrew, director of marketing for Highland Lakes. "We are honored to have been chosen to fill its information technology and billing needs."
ACC Mergers Pending
ROCHESTER, N.Y.--ACC Corp. recently announced it will merge with US WATS Inc., a switched-based long distance service provider headquartered in Bala Cynwyd, Pa.
The transaction is valued at $46 million, or about $2.48 per share of US WATS common stock.
ACC also announced that its board of directors is reviewing an unsolicited proposal from Tel-Save Holdings Inc. for a merger between the two companies.
MGC Focuses on Network Faults and Management
SAN DIEGO--Applied Digital Access Inc. (ADA) announced that MGC Communications has licensed ADA's traffic data collection and engineering system (TDC&E), as well as its fault management system (FMS). This software will allow MGC to increase productivity by focusing resources on network faults and engaging in proactive network maintenance.
ADA's TDC&E features a web-based browser and an open interface to traffic data to collect operational measurements from Nortel DMS 500 switches in MGC's network.
ADC, NewNet Merge
SHELTON, Conn.--ADC Telecommunications Inc. and NewNet Inc. announced a merger between the two companies. The merged company now will be known as ADC NewNet. ADC NewNet will continue to operate as an independent subsidiary of ADC.
