Agreement Follows Antitrust Clearance From U.S. Department
Of Justice
Jackson, MS and Washington, D.C. - July 15, 1998
MCI and WorldCom today received final approval from the U.S.
Department of Justice (DoJ) to complete the WorldCom merger.
Following the decision from the DoJ, MCI signed an agreement to
sell its Internet backbone facilities and wholesale and retail
Internet businesses for $1.75 billion in cash to Cable &
Wireless.
"We have fully addressed the antitrust
concerns of the U.S. Department of Justice and look forward to
gaining final regulatory approval from the Federal Communications
Commission," said Bert Roberts, MCI's chairman. "We
are eager to begin delivering the many benefits of the WorldCom
merger - growth for our shareholders, innovation and value for our
customers, and new opportunities for our employees."
Terms of the Cable & Wireless Transaction
The sale of MCI's Internet assets includes
all associated traffic, revenue and backbone facilities. MCI's
Internet business is projected to have revenue of approximately
$375 million this year. Cable & Wireless will acquire the
following Internet assets:
- U.S. nationwide Internet backbone
- the backbone, comprising all of its 22 domestic nodes,
15,000 interconnection ports, more than 40 ongoing peering
agreements, routers, switches, modems, e-mail servers and other
equipment dedicated to its support. The network features
high-speed dedicated access as well as toll-free nationwide and
local dial-up access from more than 300 points across the
U.S. - Dedicated Access Customers
- Cable & Wireless will gain 3,300 major dedicated
Internet access corporate accounts. - Internet Service Provider (ISP) Customers
- Cable & Wireless will acquire approximately 1,300 ISP
customers, including 130 International Directly Connected
Customers (IDCs) in more than 75 countries. ISPs contract to
provide Internet, billing and customer service to business and
mass market users. - Dial-Up Business
- this business provides nationwide dial-up Internet access
for more than 250,000 consumers and 60,000 business
users. - Web hosting and managed firewall services
- these businesses include more than 100 corporate accounts
and associated servers.
MCI and Cable & Wireless have agreed to
terms that enable Cable & Wireless to fulfill all contractual
arrangements and to continue MCI's high standards of customer
service. MCI, for example, has contracted with Cable & Wireless
to provide underlying transport services for Cable &
Wireless's Internet backbone for up to five years.
MCI and Cable & Wireless have also agreed to
terms to facilitate the continued growth and long-term viability of
these Internet businesses. These terms include non-compete
agreements for transitioning accounts of 24 and 18 months for
wholesale and dedicated access retail customers, respectively. In
addition, approximately 1,000 MCI employees - with expertise in
engineering, sales, customer service, marketing, operations and
administrative support - will transfer to Cable & Wireless.
The agreement with Cable & Wireless is
contingent upon the final regulatory approval of the WorldCom
merger. MCI and WorldCom expect to complete their merger this
summer following Federal Communications Commission approval.
The Internet backbone services business and its
ISP customers were the subject of an agreement between Cable &
Wireless and MCI announced on May 28, 1998. Today's new
agreement includes the transfer of MCI's retail Internet
customer base.
Impact on MCI Customers
MCI's agreement with Cable & Wireless
has no immediate impact on MCI's Internet customers. They will
continue to receive Internet service from MCI until the close of
the WorldCom merger when the agreement with Cable & Wireless
becomes effective. At that time, they will become Cable &
Wireless Internet customers.
In addition, the agreement with Cable &
Wireless has no impact on MCI's non-Internet customers, the
non-Internet portions of MCI's Internet customer contracts, or
its portfolio of business and consumer communications services. All
MCI customers will continue to receive from MCI its full set of
non-Internet services, including fast-growing data services such as
frame relay, private line, ATM and SONET, as well as local and long
distance voice, and information technology services from MCI
Systemhouse.
WorldCom will offer a full suite of Internet
services to their customers upon completion of their pending
merger.
WorldCom Merger
MCI and WorldCom agreed to divest MCI's
Internet assets in an effort to expedite the completion of the
WorldCom merger. Following approval from the Federal Communications
Commission, expected soon, the companies will begin to realize the
growth opportunities presented by its unique position in the
fastest growing segments of the global communications market.
WorldCom will be the first "local to global company,"
capable of delivering advanced voice and data communications
services entirely over its own facilities worldwide.
Cable & Wireless is one of the world's
leading providers of global telecommunications services with
revenues of approximately $12 billion annually. Its businesses
provide 17 million customers in 70 countries with a complete range
of international, domestic and mobile communications. Cable &
Wireless is the world's third largest carrier of international
traffic, provides mobile communications in more than 30 countries
and operates the world's largest cableship fleet.
MCI, headquartered in Washington, D.C., is a
leading provider of local-to-global communication services to
business, government and residential users. The company's
fast-growing portfolio of advanced data and IT services accounts
for a quarter of MCI's approximately $20 billion in annual
revenue. MCI operates one of the world's largest and most
advanced digital networks, connecting local markets in the U.S. to
hundreds of locations worldwide. MCI has agreed to merge with
WorldCom, one of the world's fastest-growing communications
companies. The merger will create MCI WorldCom, a company uniquely
positioned in the U.S. local and long distance markets as well as
the global data and Internet markets.
