WASHINGTON-MCI Communications Corp. turned itself into a national wireless powerhouse last week by signing cellular resale agreements with AT&T Corp., GTE Corp., BellSouth Corp., Frontier Corp. and the AirTouch Communications Inc.-Cellular Communications Inc. partnership known as New Par.
The resale pacts build on MCI’s $190 million purchase in May of Nationwide Cellular Service Inc., the largest cellular reseller in the country, by giving the No. 2 long-distance telephone company a presence in the top 100 markets and access to 75 percent of the U.S. population.
The deal with Nationwide, which affects 300,000 customers, is supposed to close next month. MCI said it could announce more wireless resale agreements later this year. It is unclear when MCI will begin marketing cellular service around the country.
MCI negotiated discounts between 30 percent and 40 percent below retail with the five cellular firms. No further details on the transactions were available.
“I think this positions us uniquely as a nationwide provider of wireless services across a broad spectrum of the market,” said Bert Roberts, chairman of MCI.
Roberts said he expects cellular resale to be as successful as paging resale for MCI, which has been signing up 60,000 paging customers a month through its Friends & Family Connections program since inking resale accords in January with Paging Network Inc. and SkyTel Corp. PageNet is the nation’s top paging firm; SkyTel is ranked 11th by RCR.
“We are going to package, provide added value to wireless services, sell on a nationwide basis and sell both to our customer base and to new customers,” Roberts stated.
“It’s going to be the strength of MCI’s marketing, both the business sales people as well as the mass merchandising-advertising, telemarketing, direct mail-that is going to drive those [wireless] businesses,” he added.
As such, MCI has entered the increasingly competitive wireless arena differently than other telecommunications giants who have spent hundreds of millions-sometimes billions-of dollars on acquisitions and on spectrum for next-generation paging and pocket phone systems know as personal communications services. MCI is considering getting into the PCS resale business once systems are built in coming years.
Roberts said reselling cellular service of arch rival, AT&T Corp., which paid $11.5 billion for top-ranked McCaw Cellular Communications Inc. last year, is not as odd as it appears considering the fact the AT&T may become a big customer of MCI’s local access business. MCImetro offers such service to businesses in 12 markets today and expects to expand to 20 markets by year’s end.
MCI last week also announced a restructuring plan that creates separate units for its core communications business and new ventures and alliances.
As a result, 2,500 to 3,000 employees will be laid off by the end of 1995 and MCI will take a pre-tax charge of between $600 million and $800 million against third quarter earnings to write off unproductive and obsolete assets.
MCI Telecommunications Corp., to be headed by Timothy Price, will oversee business and consumer units, network operations and information systems. The company said it is looking into establishing separate classes of common stock, so-called targeted stock, and selling minority interests in its subsidiaries.
MCI said it had a strong second quarter, reporting revenue of $3.7 billion-an increase of $397 million, or 12 percent, when compared with the same period a year ago. Second quarter net income was $260 million, or 38 cents per share, in the quarter vs. $215 million, or 37 cents per share, last year.
