RealTime IT News

Verizon Completes MCI Takeover

Verizon completed its $8.4 billion purchase of MCI today, creating the nation's second largest telecom carrier behind the new AT&T , which itself is a newly formed merger between the former long distance carrier and SBC.

Like the SBC-AT&T merger, the Verizon-MCI deal combines a Baby Bell with a dominant long distance carrier. MCI brings to the table a 98,000-mile network reaching into 140 countries.

MCI also has a number of large IP data-service deals with government agencies and corporations.

The Baby Bells consider those long-term, high-margin contracts crucial to their future prosperity as cable operators, Voice over IP upstarts and wireless carriers eat away at their traditional telephone business.

"This milestone for Verizon creates a new competitive force with the power of the global MCI network and the reach of Verizon's broadband and wireless networks in the U.S.," Verizon Chairman and CEO Ivan Seidenberg said in a statement.

The newly combined Verizon and MCI will have approximately $90 billion in annual revenues and approximately 250,000 employees.

In May, Verizon won a lengthy battle with Qwest for MCI. Ultimately, the long-distance and enterprise network services provider deemed Verizon's $8.4 billion offer superior to Qwest's $9.7 billion proposal.

MCI officials cited several reasons for denying Qwest, including concerns about its overall financial picture; questions about its ability to invest in new capabilities; doubts about synergies; and feedback from current enterprise customers.