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C&W Nears Full Control of MCI's Internet Business

Strategic Insights

— 1 min read

Cable & Wireless (C&W), the British telecoms giant, is close to acquiring the remaining internet businesses of MCI, the US group, following the partial sale in May. The deal, worth between $1.5bn and $2bn, will give C&W control over MCI's retail customer base, comprising large companies that have hired MCI to manage their internet traffic. This acquisition follows C&W's purchase of MCI's internet backbone and a customer base of 1,300 internet service providers for $625m in May.

Key Takeaways:

  • C&W is close to buying MCI's remaining internet businesses for between $1.5bn and $2bn, extending their agreement signed in May.
  • The deal includes MCI's retail customer base, consisting of large companies that hire MCI for internet traffic management.
  • C&W acquired MCI's internet backbone and a customer base of 1,300 internet service providers for $625m in May.
  • The EU cleared the merger between MCI and WorldCom after MCI agreed to sell its entire internet division.
  • C&W's chief executive, Dick Brown, believes internet traffic will grow rapidly as data and voice telephony adopt internet-based standards.
  • The new deal values the operations at a multiple of four to five, compared to the original sale at three times revenues.
  • C&W faced competition from British Telecom and AT&T for the business.
  • C&W filed a lawsuit against MCI in June to ensure first refusal on any internet businesses MCI decided to sell.

Statistics:

  • $1.5bn - $2bn: the estimated value of the deal
  • $625m: the price C&W paid for MCI's internet backbone and 1,300 internet service providers in May
  • $37bn: the value of the MCI's merger with WorldCom
  • 1,300: the number of internet service providers C&W acquired in May
  • Four to five: the multiple at which the operations are valued in the new deal
  • Three: the multiple at which the operations were valued in the original sale
  • $625m (pounds 380m): the price C&W paid for MCI's internet backbone and 1,300 internet service providers in May

Sources:

  • "C&W Nears Full Control of MCI's Internet Business" (Daily News, 1999)
  • "EU Clears MCI-WorldCom Merger" (Financial Times, 1999)
  • "C&W Wins Internet Backbone Sale" (Wall Street Journal, 1999)

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