UPDATED: Qwest (Quote) is reportedly in talks to buy MCI (Quote)
for $6.3 billion, a deal that resembles SBC's recent acquisition of
AT&T (Quote) from a strategic standpoint.
The Denver-based regional carrier's bid is around the market price for the
Ashburn, Va.-based long-distance and business services specialist, The
Wall Street Journal reported today.
But the deal is by no means done. Verizon Communications (Quote) is
holding "exploratory talks" with MCI, which could force Qwest to either raise its bid or drop out, the newspaper said.
Jay Pultz, a research vice president at the IT research firm Gartner, said
Verizon should be aggressive, given the pace of consolidation in the
industry.
"Verizon will need to jump into this -- the sooner the better," Pultz told
internetnews.com. "If Qwest were to acquire MCI, that is unlikely the
last step. Rather, some company -- like Verizon -- will likely acquire a
Qwest/MCI combination."
Verizon spokesman Bob Varettoni declined comment on "rumors or speculation
of this kind." Qwest and MCI officials were not immediately available for comment.
Industry watchers say buying MCI would help either Baby Bell stay
competitive against SBC-AT&T by adding an enterprise platform to deliver
managed network services, such as Virtual Private Networks (define), to
large corporations government agencies.
The buyer would also gain an international network spanning six continents,
which would vastly expand a regional carrier's footprint and potential
revenues -- a crucial need in a consolidating sector.
If the SBC-AT&T merger is approved by regulators, it would displace Verizon
as the nation's largest telecommunications provider. The combined company
will have more than $70 billion in sales and more than 200,000 employees.
For MCI, a sale would mark the latest development in its tumultuous history.
The telecom's $107 billion bankruptcy filing in 2002 ranks as the largest
in U.S. corporate history, knocking Enron's notorious $63 billion petition
the year before into second place.
Former WorldCom CEO Bernard Ebbers is currently on trial
for federal fraud charges associated with WorldCom's $11 billion
accounting scandal.
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