Verizon (Quote) completed its $8.4 billion purchase of MCI today,
creating the nation's second largest telecom carrier behind the new AT&T
(Quote), which itself is a newly formed merger between the former
long distance carrier and SBC.
Like the SBC-AT&T merger, the Verizon-MCI deal combines a Baby Bell with a
dominant long distance carrier. MCI brings to the table a 98,000-mile
network reaching into 140 countries.
MCI also has a number of large IP data-service deals with government
agencies and corporations.
The Baby Bells consider those long-term,
high-margin contracts crucial to their future prosperity as cable operators,
Voice over IP (define) upstarts and wireless carriers eat away at their
traditional telephone business.
"This milestone for Verizon creates a new competitive force with the power
of the global MCI network and the reach of Verizon's broadband and wireless
networks in the U.S.," Verizon Chairman and CEO Ivan Seidenberg said in a
statement.
The newly combined Verizon and MCI will have approximately $90 billion in
annual revenues and approximately 250,000 employees.
In May, Verizon won a lengthy battle with Qwest (Quote) for MCI.
Ultimately, the long-distance and enterprise network services provider
deemed Verizon's $8.4 billion offer superior to Qwest's $9.7 billion
proposal.
MCI officials cited several reasons for denying Qwest, including concerns
about its overall financial picture; questions about its ability to invest
in new capabilities; doubts about synergies; and feedback from current
enterprise customers.
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