LONDON-Cable & Wireless plc announced plans to purchase MCI Communications Corp.’s Internet backbone service business for $625 million, which should help clear the way for the European Commission to approve the proposed MCI-WorldCom Inc. merger.
GTE Corp. in early May filed a private antitrust lawsuit to block the $38 billion merger, claiming the combined company would monopolize the market for Internet backbone services with a 40-percent to 60-percent market share. GTE had courted MCI with a merger bid last fall, but lost out to WorldCom.
“Data has already overtaken voice in terms of traffic in the U.S. and across the Atlantic and Pacific oceans,” said Richard H. Brown, Cable & Wireless chief executive. “This transaction catapults us into a leading role in the world league of Internet and data traffic carriers.
“It gives us the scale and scope we need in the United States to match our leading role in the rest of the world,” Brown stated.
Under terms of the agreement, MCI will sell 22 domestic nodes; 15,000 interconnection ports; more than 40 ongoing partnering agreements; and equipment dedicated to supporting the network, including switches and routers. Cable & Wireless also will acquire MCI’s contracts with its more than 1,300 Internet service provider customers.
