Word: mci
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...more than two decades, scrappy long-distance carrier MCI has clamped onto AT&T like a demented terrier on a mailman's ankle and refused to let go. It was MCI's antitrust charges against the old Ma Bell that led to the breakup of AT&T's telephone monopoly. Now MCI is joining forces with British Telecommunications--Britain's formerly state-owned telephone company--to form an empire with the clout to go phone-to-phone around the world with AT&T and other giants...
...what would be the largest foreign buyout of a U.S. company if regulators approve it (an uncertain prospect, given likely resistance from rivals like AT&T), BT agreed Nov. 3 to pay about $21 billion for the 80% of MCI it does not already own. The merged company, to be called Concert, taking the name of a joint venture between the two, would have $42 billion in revenues and match AT&T in market value. The new colossus, boasts MCI chairman Bert Roberts, "will trump the competition as we open up communications markets both domestically and around the world...
Despite the global pretensions, Concert's first gig will be the $100 billion local phone network in the U.S. Hello, Baby Bells. Competition calling. The combination of MCI's hell-bent-for-market-share moxie and BT's muscle--Concert will have a cash flow of $12 billion--could wreak havoc in local markets, and that could be good news for anyone with a dial tone...
...MCI's Roberts sounds as though he can't wait to start cutting rates: "The local market is the most profitable in the world--twice as profitable as the long-distance market. Simply put, rates will come down. I wouldn't be surprised that over time they came down by a factor of two." MCI is set to enter 25 local markets in January. Thanks to its national brand name and scrappy style, "MCI was ready to beat the crap out of the regional phone companies even before the British Telecom deal," says David Goodtree of Forrester Research, a Massachusetts...
Merging the buccaneering MCI culture with tradition-bound BT could prove tricky. To preserve MCI's independent spirit, Roberts will serve as co-chairman with BT chief Iain Vallance and remain at MCI headquarters in Washington...