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MCI to buy security services firm

Company says its acquisition of NetSec will help move its advanced-security business ahead by more than a year.

MCI plans to buy managed security services provider NetSec for $105 million in cash, the companies said Thursday.

The acquisition will move MCI's advanced-security business ahead by more than a year, the telecommunications giant said in a statement. The transaction is expected to close within 30 days.

"We want to make MCI's brand synonymous with security," Jonathan Crane, chief strategy officer for MCI, said in a conference call. "We want to be known as the company that understands security from the customer premises to the network."

Herndon, Va.-based NetSec specializes in monitoring and protecting computer networks. Its customers include British Petroleum and Toyota, as well as government agencies such as the U.S. Treasury Department.

NetSec's security service allows businesses to see which viruses and worms are approaching their networks to help them determine which ones are potentially damaging. The professional services unit of NetSec also helps IT staff patch security holes.

Since MCI emerged from bankruptcy last spring, CEO Michael Capellas has been touting a new business model that strays away from traditional long-distance consumer voice services toward more Internet-based services. As part of this strategy, the company is focused on serving business customers and offering them new services, such as security.

MCI is not the only carrier focusing on managed security. Its rival AT&T has adopted a similar strategy. Falling prices on long-distance calling and increased competition from Baby Bells, such as Verizon Communications and Bell South, has forced MCI and AT&T to look for other sources of revenue.

The managed security market offers good potential. Industry analyst firm IDC estimates that companies spent more than $12 billion worldwide in 2004 to protect against security threats. Companies spent some of this money on installing and managing security equipment themselves, but part of it was also spent on managed services from providers such as MCI.