MCI Worldcom Acquires Prime One Tele-TV in Bold Move to Circumvent Local Telecommunications

Strategic Insights -

MCI Worldcom, a global telecommunications company, has made a significant move in its efforts to bypass local telephone companies by acquiring Los Angeles-based Prime One Tele-TV, a wireless cable TV system company. The purchase is estimated to be worth between $200 million and $650 million, although the exact price has not been disclosed. This acquisition is part of a broader strategy by major telecommunications companies to target the wireless and wired cable TV markets in order to offer local services to customers.

Key Takeaways:

  • MCI Worldcom has acquired Prime One Tele-TV, a wireless cable TV system company based in Los Angeles, with a potential value of between $200 million and $650 million.
  • The acquisition is part of a larger effort by top telecom companies to enter the local telephony market by using cable TV networks to bypass local telephone companies.
  • Prime One Tele-TV has millions of "line of sight" households in its catchment area, which is seen as a valuable asset to major long-distance telephone companies.
  • SBC Communications, which previously acquired the Los Angeles cable system through its purchase of Pacific Telesis, may be a double loser in this deal, having given up the wireless cable spectrum and now seeing Prime One Tele-TV make money on it.
  • AT&T, another major telecommunications company, has also begun offering local phone service over Tele-Communications Inc.'s (TCI) cable TV network in selected cities in Northern California, with plans to expand to at least seven more cities by the end of the year.

Statistics:

  • Estimated value of the acquisition: $200 million - $650 million
  • Number of "line of sight" households in Prime One Tele-TV's catchment area: millions
  • Number of cities where AT&T plans to offer local phone service over cable TV by the end of 1999: at least seven

Sources:

  • Staff, Newbsytes, LOS ANGELES, CALIFORNIA, U.S.A., 1999 MAY 13
  • CNBS
  • Newsbytes News Network, http://www.newsbytes.com (19990513/WIRES TELECOM, ONLINE, BUSINESS/)