Qwest And Verizon Vie For MCI - InformationWeek

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.


Qwest And Verizon Vie For MCI

With MCI's deadline looming for reviewing Qwest Communications' takeover bid, the latter firm is ready to raise the ante in hopes of derailing Verizon Communications' offer for the long distance company.

With MCI's deadline looming for reviewing Qwest Communications' takeover bid, the latter firm is ready to raise the ante in hopes of derailing Verizon Communications' offer for the long distance company.

At the same time, Verizon's Chairman and CEO Ivan Seidenberg spoke out in testimony before the Senate Judiciary Committee claiming that a Verizon-MCI merger would ensure that a strong competitor to AT&T remains viable. SBC Communications is in the process of acquiring AT&T, the leading long distance and business enterprise company.

In another development, a group of small telecommunications companies has hired Gary Reback--the attorney who pushed the Justice Department to sue Microsoft for antitrust violations--to attempt to halt takeovers of AT&T and MCI. Led by XO Communications, the group said it will take its complaint to governmental regulatory agencies.

The Wall Street Journal reported that Qwest is expected late Wednesday to launch a $26-a-share offer for MCI--$1.8 billion more than Verizon's offer. MCI's board has signaled that it favors merger with Verizon, because it believes the former Baby Bell--the largest telecommunications firm in the country--is a better fit. At the same time, major MCI shareholders have been trying to drum up support for higher and higher bids.

As things stand, the MCI board has indicated that it favors the Verizon bid, but has said it would review sweetened bids from Qwest.

"There's no way Verizon is going to let MCI get away," said Pete Wilson, vice chairman of Vercuity. "They'll just reach deeper into their pockets if they have to."

Wilson said he doubted appeals to regulatory agencies could be successful, because MCI is losing money and AT&T is just marginally profitable and its profitability was reached only by initiating massive layoffs.

In his Senate testimony, Seidenberg said an MCI acquisition by Verizon would not change the dynamics of the consumer market, nor would it impact the universal service program.

"Consumers will benefit because MCI's IP network and products, combined with our deployment of fiber directly to home and businesses, will be the most advanced platform in the country," he told Senators.

"Competition from wireless, cable telephony, e-mail, instant messaging, and VoIP will continue to drive pricing, with or without this transaction. The consumer marketplace will continue to become less concentrated over time--with or without this transaction--as new platforms view for the broadband household."

Qwest CEO Richard Notebaert has argued that a Qwest-MCI combine would help create a more competitive environment in telecommunications than a Verizon-MCI entity.

Wilson, whose telecommunications expense management (TEM) firm specializes in enterprise installations, said the telecommunications industry still has significant consolidating to undergo. He expects to see the mergers and acquisitions landscape to pick up after the current spate of acquisitions--including Sprint's acquisition of Nextel--are digested.

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
Comment  | 
Print  | 
More Insights
IT Spending Forecast: Unfortunately, It's Going to Hurt
Jessica Davis, Senior Editor, Enterprise Apps,  5/15/2020
Helping Developers and Enterprises Answer the Skills Dilemma
Joao-Pierre S. Ruth, Senior Writer,  5/19/2020
Top 10 Programming Languages in Demand Right Now
Cynthia Harvey, Freelance Journalist, InformationWeek,  4/28/2020
White Papers
Register for InformationWeek Newsletters
The State of IT & Cybersecurity Operations 2020
The State of IT & Cybersecurity Operations 2020
Download this report from InformationWeek, in partnership with Dark Reading, to learn more about how today's IT operations teams work with cybersecurity operations, what technologies they are using, and how they communicate and share responsibility--or create risk by failing to do so. Get it now!
Current Issue
Key to Cloud Success: The Right Management
This IT Trend highlights some of the steps IT teams can take to keep their cloud environments running in a safe, efficient manner.
Flash Poll