Verizon Sends MCI A Valentine

Greg Galitzine : Greg Galitzine's VoIP Authority Blog
Greg Galitzine

Verizon Sends MCI A Valentine

Well, I guess it’s official. Verizon has acquired MCI for $4.8 billion in equity and $488 million in cash (total: $5.3 billion). The transaction also encompasses a special dividend payable to MCI shareholders, bringing the total to $6.7 billion for the number 2 long-distance carrier.

The main play here is Verizon expanding into the enterprise market and keeping pace with sibling SBC, who recently purchased AT&T. MCI brings with it a host of government contracts and such large customers as HP.

Throw in MCI’s UUNet assets and Verizon is in great shape to offer services to a truly global audience. I blogged earlier about the possibility of running Verizon’s VoiceWing VoIP service over a network like MCI’s. I guess we’re going to see how that works out after all.

According to a press release issued today from MCI:

The transaction adds new strength to the telecommunications services both companies provide. It ensures that consumers and businesses will have a supplier with the financial strength to maintain and improve MCI’s Internet backbone network, which is the largest in the world based on company-owned points of presence.

The transaction will also mean better service for Enterprise customers by enhancing Verizon’s ability to compete for and serve large-business and government customers with a complete range of services, including wireless and the most sophisticated IP (Internet Protocol) based services.

The Boards of Directors of both companies have approved the agreement.

“This is the right deal at the right time,” said Verizon Chairman and CEO Ivan Seidenberg. “We have been evaluating a transaction with MCI for some time, and now we have the opportunity to reach an agreement at the right price that works for both companies and at a time when MCI is gaining momentum. It is a natural and logical extension of Verizon’s strategy to transform our company to serve growth markets and offer broadband technologies.

“This acquisition builds on and accelerates Verizon’s growth plan in the Enterprise market, and it facilitates our becoming a major provider in that market sooner and less expensively than if we had continued on a path of organic growth. The acquisition will significantly enhance our customer service and competitive positioning by giving us a global reach, a suite of IP-based and value-added services, and a powerful, broad base of large-business and government customers.”

“With our heritage of innovation, global network and world-class Enterprise capabilities, MCI is the right partner for Verizon,” said Michael D. Capellas, MCI president and CEO. “Combined with Verizon’s financial strength and record of operational excellence, we will accelerate delivery of next-generation services, broaden our product portfolio and better serve our customers.”

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