MCI Declares Qwest Bid Superior

MCI Inc. on Saturday declared a bid by Qwest Communications International Inc. superior to an offer by Verizon Communications Inc. in the ongoing battle for the No. 2 long-distance carrier.

Verizon, the biggest phone company in the United States, has until Friday to respond with a better offer than its current bid for MCI, which is valued at $7.64 billion. Qwests bid is worth $9.9 billion, according to Reuters.

In a statement released Saturday, Verizon said it would consider all its options. The New York-based telecommunications giant could raise its bid for MCI or take other actions, including moving to end the agreement with the company previously known as WorldCom.

With $71.3 billion in annual revenue, earnings of $7.8 billion and a market value of $94 billion, Verizon is a significantly larger and stronger company than Denver-based Qwest, which has been unprofitable and faced accounting investigations in recent years.

Yet Qwest, a regional phone carrier in 14 states covering a large section of rural America, has been aggressively pursuing MCI over the last few months despite a merger agreement MCI and Verizon reached in February.

On Monday, Qwest said it expected its first-quarter results to reflect steady improvement.

The company anticipates posting a profit as a result of a gain of approximately $250 million on the sale of wireless assets to Verizon Wireless. Qwest also expects cash generated from operations to exceed capital expenditures for the three-month period and said it would report flat revenue for the fourth consecutive quarter. Qwest will report results Tuesday, May 3.

“Our continuing disciplined cost reduction and facilities optimization efforts are paying off and benefiting profitability, as planned, Qwest Chairman and CEO Richard Notebaert said in a statement. This progress is enabling Qwest to continue investment in our growth products and other strategies to improve our competitive position, financial flexibility and future growth.

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