MCI-WorldCom merger questioned
Facing growing concern from government and industry, MCI and WorldCom are searching for ways to win approval for their $37 billion merger.
As widely reported, MCI is soliciting offers for its wholesale Internet business in an attempt to assuage concerns that its merger with WorldCom would result in a single company that would route up to 70 percent of the traffic over the Net.
MCI spokesman Jim Monroe said the company is working to address regulators' concerns but declined to discuss whether its Internet business is up for sale. A WorldCom spokeswoman declined to comment.
The companies' reticence about their plans did not stop others from publicly commenting on them. Responding to a reporter's question at the company's annual shareholder meeting, AT&T chairman and chief executive C. Michael Armstrong said he'd be "very interested" in talking with MCI about the deal, according to Dow Jones. An AT&T spokesman had no further comment.
Other industry players and observers gave mixed reactions to the reports that MCI might spin off its Internet business. Jim Crowe, chairman for network startup Level 3 Communications, said he would be skeptical of such an arrangement.
After peering negotiations among MCI, WorldCom and Level 3 broke down, Crowe retained the litigation boutique founded by David Boies to represent it in U.S. and European meetings. A high-profile attorney who successfully defended IBM in a protracted antitrust fight against the government, Boies was one of the architects of the action the Justice Department brought against Microsoft on Monday.
Despite Crowe's skepticism, Abhi Chaki, an analyst at Jupiter Communications, said a divestiture of MCI's wholesale Internet business would go a long way to addressing regulators' concerns. MCI's divestiture would "significantly lower their dominance of Internet traffic that traverses over their respective backbones," he said.
European Commission competition commissioner Karel Van Miert also weighed in on the proposed merger, telling Bloomberg today the companies appeared "prepared" to offer "proper remedies" to address antitrust concerns. There were no details about exactly what concessions the companies might make.