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Verizon confirms merger with MCI


Verizon confirms merger with MCI


The latest in a wave of US telecommunications mergers sees the largest local phone company in the US, Verizon, acquiring long-distance carrier MCI. The price is around 5.2 billion euros in cash, shares and dividends. Verizon’s rival Qwest had actually bid more – in shares – but concerns about Qwest’s long term financial stability made the difference. The deal gives Verizon the size and resources to compete against the combined SBC Communications and AT&T. Two weeks ago they announced plans to merge. It also gives Verizon entry into the market serving large corporations.

Both Verizon and SBC have been trying to force their way into the market for business communications, but with limited success, which is why they have bought their way into that sector. Business services revenue has been declining across the industry as prices fall. But data and communications traffic have been expanding rapidly, making the market more attractive. The mergers also give Verizon and SBC far broader national and international networks. Both boards have signed off on this latest deal which now has to be approved by shareholders and regulators.
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