by Colin C. Haley
MCI has jilted Qwest yet again.
The Ashburn, Va., long-distance and enterprise network services
provider today deemed Verizon's latest $8.4 billion ($26 per share)
offer superior to Qwest's $9.7 billion ($30 per share) proposal.
MCI officials listed several factors they say compensate for the $1.3
billion difference, including "the increasing need for scale and
comprehensive wireless capabilities."
Verizon Wireless, co-owned by Verizon and Vodafone, is the
second-largest U.S. mobile carrier with 43 million subscribers on a
nationwide network. Meanwhile, Denver-based Qwest serves 767,000
through a third-party system.
A combined Verizon-MCI could bundle third-generation (define) wireless
offerings with Internet connectivity, data transport and virtual
private network (define) services to increase revenue from
corporations and government agencies.
Other factors cited by MCI include: Qwest's overall financial picture;
questions about its ability to invest in new capabilities; doubts
about synergies; and feedback from current enterprise customers.
"From the standpoint of risk versus reward, Verizon's revised offer
presents MCI with a stronger, superior choice," said Nicholas
Katzenbach, MCI chairman, in a statement.
Verizon, a regional telecom based in New York, upped its offer by
about $800 million this weekend to answer Qwest in the three-month
Before today, Qwest had finally pulled ahead of Verizon in the
competition for MCI, but the lead only lasted a week. A Qwest
spokesman was not immediately available for comment, but the carrier
could take its offer directly to MCI shareholders to see if they agree
with their board's opinion.
Verizon has been pushing financial stability in its proposals and
press releases over the sale price.
"The evolving nature of the telecommunications industry requires that
effective competitors have financial strength and a full array of
offerings," Ivan Seidenberg, Verizon CEO, said in a statement.
"Verizon is a leading national communications provider with a stable
balance sheet, a premier national wireless business, and a plan to
invest in MCI."
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
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.
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