Qwest (Quote) today said MCI (Quote) must acknowledge that
Qwest's bid is superior to Verizon's (Quote) by midnight for merger
talks to proceed.
However, if MCI publicly declares its preference for Qwest's offer, the $8.9
billion proposal will remain on the table until June 19 so final details can
be worked out.
The latest timetable was delivered in a letter from Qwest CEO Richard
Notebaert to MCI Chairman Nicholas Katzenbach today.
Additionally, Denver's Qwest upped its financing commitments from $5.75
billion to $6.25 billion to reassure MCI decision-makers that it has the
resources to complete post-merger network improvements.
"[The financing] will enable us to complete the merger and allow the
combined companies to compete aggressively for new customers, make
necessary capital improvements and continue to expand next-generation
services," Notebaert said.
Qwest's aggressive push in recent weeks is aimed at scuttling Verizon's $7.6
billion agreement for the Ashburn, Va., long-distance and network services provider.
Verizon has threatened to drop out of the MCI sweepstakes if the long-distance carrier indicates a preference for Qwest's higher bid.
Ivan Seidenberg, Verizon's CEO, has maintained that MCI would be better off in the long term with Verizon. He's also criticized Qwest's claims of synergies and
faster regulatory approval were MCI to go with Qwest.
Qwest and Verizon covet MCI because of its large IP data-service deals with
government agencies and corporations. And with the pending merger of SBC and
AT&T, neither wants to be left behind by the wave of industry consolidation.
The Baby Bells consider those long-term, high-margin contracts crucial to
their future prosperity, as cable operators, VoIP upstarts and wireless
carriers try to hone in on their traditional businesses. If MCI were to
switch its allegiance, it would have to pay Verizon a $240 million breakup
fee.
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