RealTime IT News

Qwest Said to Bid $6B For MCI

UPDATED: Qwest is reportedly in talks to buy MCI for $6.3 billion, a deal that resembles SBC's recent acquisition of AT&T from a strategic standpoint.

The Denver-based regional carrier's bid is around the market price for the Ashburn, Va.-based long-distance and business services specialist, The Wall Street Journal reported today.

But the deal is by no means done. Verizon Communications is holding "exploratory talks" with MCI, which could force Qwest to either raise its bid or drop out, the newspaper said.

Jay Pultz, a research vice president at the IT research firm Gartner, said Verizon should be aggressive, given the pace of consolidation in the industry.

"Verizon will need to jump into this -- the sooner the better," Pultz told internetnews.com. "If Qwest were to acquire MCI, that is unlikely the last step. Rather, some company -- like Verizon -- will likely acquire a Qwest/MCI combination."

Verizon spokesman Bob Varettoni declined comment on "rumors or speculation of this kind." Qwest and MCI officials were not immediately available for comment.

Industry watchers say buying MCI would help either Baby Bell stay competitive against SBC-AT&T by adding an enterprise platform to deliver managed network services, such as Virtual Private Networks , to large corporations government agencies.

The buyer would also gain an international network spanning six continents, which would vastly expand a regional carrier's footprint and potential revenues -- a crucial need in a consolidating sector.

If the SBC-AT&T merger is approved by regulators, it would displace Verizon as the nation's largest telecommunications provider. The combined company will have more than $70 billion in sales and more than 200,000 employees.

For MCI, a sale would mark the latest development in its tumultuous history. The telecom's $107 billion bankruptcy filing in 2002 ranks as the largest in U.S. corporate history, knocking Enron's notorious $63 billion petition the year before into second place.

Former WorldCom CEO Bernard Ebbers is currently on trial for federal fraud charges associated with WorldCom's $11 billion accounting scandal.