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WorldCom building Internet monopoly

``` [Told you so.]

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Date: Thu, 2 Oct 1997 10:55:54 -0400 From: Kevin Taglang Reply-To: lists@BENTON.ORG To: BENTON-COMPOLICY@periplum.cdinet.com Subject: WorldCom-related Headlines for 10/2/97

Communications-related Headlines for 10/2/97

WorldCom Bids for MCI WSJ: Ring Leader: WorldCom's MCI Bid Alters Playing Field For Telecom Industry WSJ: BT's Global Strategy Hits Wall in WorldCom Bid WSJ: Would WorldCom-MCI Deal Lift Tolls on Net? WSJ: WorldCom Bid Raises Question: Who's Next? TelecomAM: WorldCom Stages $30 Billion Takeover Bid for MCI WP: WorldCom Rising Fast by Acquisitions WP: Upstart Rival Surprises MCI With $30 Billion Merger Bid NYT: Upstart Offering $30 Billion To Buy MCI, Using Stock NYT: A Long-Distance Visionary

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WorldCom Bids for MCI

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Title: Ring Leader: WorldCom's MCI Bid Alters Playing Field For Telecom Industry Source: Wall Street Journal (A1) Author: Steven Lipin & John Keller Issue: Mergers Description: WorldCom, the nation's fourth-largest long distance provider, unveiled a $30 billion bid to purchase MCI, a company more than three times as large as WorldCom. WorldCom has revenues of about $7 billion/year. In just the past three years, WorldCom has made five big deals totaling $20 billion plus a $2.4 billion stock deal to acquire Brooks Fiber Properties of St. Louis.

Title: BT's Global Strategy Hits Wall in WorldCom Bid Source: Wall Street Journal (A3) Author: Gautam Naik Issue: Mergers Description: British Telecommunications' global strategy, dubbed Concert, may unravel with WorldCom's bid to buy MCI. BT is unlikely to match WorldCom's bid which is worth $9 billion more. BT recently scaled back its original offer to buy the 80% stake in MCI which it does not already own. BT stock rose yesterday in anticipation that BT will make a profit on its 20% share of the US's #2 long distance carrier.

Title: Would WorldCom-MCI Deal Lift Tolls on Net? Source: Wall Street Journal (B1) Author: Thomas Weber & Rebecca Quick Issue: Mergers Description: If WorldCom is successful in its bid to buy MCI, the resulting company may be within reach of dominating "the innards of the Internet." The company would control 60% of all US traffic on the global computer network and a large share of the traffic world wide. That control could allow WorldCom to raise prices for Internet use. Earlier this year, WorldCom started charging small Internet service providers for connections to its network. WorldCom's vision is to change the traditional, "funky commune" approach to exchanging data between ISPs (called peering) and turn it into a capitalistic one. "Ultimately, that could signal the demise of the ubiquitous $19.95-a-month unlimited access plans."

Title: WorldCom Bid Raises Question: Who's Next? Source: Wall Street Journal (C1) Author: Susan Pulliam Issue: Mergers Description: On Wall Street, the hot properties are competitive local exchange carriers (CLECs), the companies building networks to compete for local phone customers against incumbents like GTE, Bell Atlantic and other Baby Bells. WorldCom (an obscure teleco interest from Malaysia) has purchased two big CLECs recently (MFS Communications and now Brooks Fiber) and its bid for MCI has pushed up the stock for Sprint as some guess that British Telecom may make a bid for the #3 long distance carrier.

Title: WorldCom Stages $30 Billion Takeover Bid for MCI Source: Telecom AM Issue: Mergers Description: WorldCom's takeover bid would result in the biggest merger in US corporate history -- larger than Bell Atlantic/NYNEX ($25.6 billion) and RJR Nabisco/Kohlberg Kravis Roberts ($25 billion in 1989). WorldCom's CEO Bernie Ebbers says, "It is a superior offer to MCI shareholders to merge with our company. We are offering a higher price, a higher premium, and a higher performing stock than BT," Ebbers said, underscoring the "common sense" he said the merger makes. "This is a shareholder issue. This is not a management ego issue. This is what is best for shareholders." Referring to MCI shareholders' interests, Ebbers was boastful of WorldCom's financial performance since going public in 1989, especially as contrasted with BT and MCI. "If you had invested $100 in WorldCom in 1989, it would now be worth $3,122. That same $100 invested with BT in 1989 would be worth $190; with MCI it would be worth $130. You aren't going to find many shareholders who object to the kind of numbers being offered."

Title: WorldCom Rising Fast by Acquisitions Source: Washington Post (A1) Author: Paul Farhi Issue: Telecommunications Merger Description: Worldcom Inc., a 14-year old long distance company based in a Southern city, has made a surprising $30 bill. bid for MCI Communications Corp. This low-profile company is actually an aggressively expanding one, due to many other company buyouts. Worldcom's CEO, Bernard Ebbers, wants to place his company at No.2 in the long distance business, with only British Telecommunications in the way. Despite their low-key status in the game, Ebbers was confident when he jokingly said, "After we finish the deal with MCI we might acquire BT."

Title: Upstart Rival Surprises MCI With $30 Billion Merger Bid Source: Washington Post (A1) Author: Mike Mills Issue: Telecommunications Merger Description: Proposing what could be known as the highest-priced merger in history, Worldcom, a low-profile LD company based in Miss., made a last-minute bid of $30 billion in common stock currency for Washington-based MCI Communications Corp. in an effort to wrest it away from British Telecomm. PLC, who also had plans to buy the company. The allure of the offer hinges on the steady strength of Worldcom's stock. Combined, MCI and Worldcom would become the No.2 long-distance giant, right behind AT&T. The companies together would carry more than half of the Internet's traffic, and be more than ready to take on the Bell regional companies. Worldcom said that service would be unchanged, but wouldn't comment on the possibility of layoffs at MCI. Nevertheless, the record-breaking merger has analysts anticipating the arrival of competition in the monopolized local phone market.

Title: A Stock Response Source: Washington Post (C1) Author: Brett D. Fromson Issue: Telecommunications Merger Description: Worldcom plans to buy MCI for about $30 bill. through simply issuing more shares of common stock and then exchanging them for all the outstanding MCI shares. This is a "deal for 90's", where common stock shares are the currency of choice in mergers. The willingness of sellers to accept shares in companies like Worldcom is the fuel behind this huge bid. Raghu Ram, a telecom services analyst in N.Y. for Wheat First securities said, "You can do a deal without any financing as long as you have currency the other company will take, and the best telecom currency stock today is Worldcom stock." Worldcom executives plan to exchange slightly more than one share of Worldcom for every share of MCI. If their stock declines before the deal is done, they would increase the number of shares to be traded for each share of MCI, i.e. Worldcom wants to give MCI shareholders 45% of the new company in exchange for their 100% ownership in MCI.

Title: Upstart Offering $30 Billion To Buy MCI, Using Stock Source: New York Times, A1,D4 Author: Mark Landler Issue: Telecommunications Description: Worldcom Inc. put in an offer yesterday to buy MCI for $9 billion more than the one put forth by British Telecommunications. Analysts believe that Worldcom's proposal could possibly pull MCI away from a merger with British Telecommunications.

Title: A Long-Distance Visionary Source: New York Times, D1,D4 Author: Steve Lhor Issue: Telecommunications Description: Bernard J. Ebbers, the chief executive of Worldcom Inc., has helped pull together approximately 50 successful acquisitions to make Worldcom the nation's fourth largest long-distance carrier. They are being called by analyst "the communications company of the future" based on their push to digitize telecommunications. A large part of Worldcom's recent purchases has been based around their desire to build up a successful digital network. "Worldcom's long-term strategy is to be an 'integrated supercarrier,' a one-stop supplier of all manner of telecommunications services."

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