RealTime IT News

Qwest Wants Props by Midnight

Qwest today said MCI must acknowledge that Qwest's bid is superior to Verizon's by midnight for merger talks to proceed.

However, if MCI publicly declares its preference for Qwest's offer, the $8.9 billion proposal will remain on the table until June 19 so final details can be worked out.

The latest timetable was delivered in a letter from Qwest CEO Richard Notebaert to MCI Chairman Nicholas Katzenbach today.

Additionally, Denver's Qwest upped its financing commitments from $5.75 billion to $6.25 billion to reassure MCI decision-makers that it has the resources to complete post-merger network improvements.

"[The financing] will enable us to complete the merger and allow the combined companies to compete aggressively for new customers, make necessary capital improvements and continue to expand next-generation services," Notebaert said.

Qwest's aggressive push in recent weeks is aimed at scuttling Verizon's $7.6 billion agreement for the Ashburn, Va., long-distance and network services provider.

Verizon has threatened to drop out of the MCI sweepstakes if the long-distance carrier indicates a preference for Qwest's higher bid.

Ivan Seidenberg, Verizon's CEO, has maintained that MCI would be better off in the long term with Verizon. He's also criticized Qwest's claims of synergies and faster regulatory approval were MCI to go with Qwest.

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 industry consolidation.

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. If MCI were to switch its allegiance, it would have to pay Verizon a $240 million breakup fee.