Woldcom rears its head for a wireless partner

Jeremy Pelofsky

ARLINGTON: MCI Chief Executive Michael Capellas said on Monday that the No.2 long-distance and data telephone company is looking for a wireless partner to add to its bundle of services to offer consumers.

MCI, whose legal name is WorldCom previously had wireless resale operations, but sold off the unprofitable business last year. The company has been in bankruptcy protection since July 2002 after becoming embroiled in an accounting scandal.

"We have had informal chats with a few people in the industry ... we are not close to signing" an agreement, Capellas told a small group of reporters after speaking to the Yankee Group Telecom Industry Forum. "It's unlikely you'll see some explosive deal."

He said that a deal would not likely be with a wireless carrier that has ties to a local telephone giant, like Verizon Wireless and Cingular Wireless, the two biggest U.S. companies. That leaves AT&T Wireless, Sprint PCS, Nextel Communications Inc. and T-Mobile.

Capellas also said that the company was extending its footprint for high-speed Internet service, via cable operators as well as digital subscriber line (DSL) service provided through traditional telephone lines. At this point he said he did not see adding video service unlike its competitors.

SBC Communications Inc., the No. 2 local telephone company, recently entered into an agreement with EchoStar Communications Corp. to bundle satellite television service, trying to compete with cable companies that now offer telephone service.

TAKEOVER TALK

The MCI executive brushed aside speculation that he was cleaning up the company so it could be sold, despite analyst expectations that MCI, as well as rival AT&T Corp. are ripe takeover targets.

"I don't think it's us who is at the forefront of the 'for sale' sign," Capellas told reporters after speaking to the Yankee Group Telecom Industry Forum. "We are really focused on an internal plan, we have a three-year plan, an 18-month product deliverable plan."

Talks for a tie-up between BellSouth Corp. and AT&T fell apart last week.

MCI last week won approval of its plan to reorganize its assets and shed all but about 10 percent of its $41 billion debt. The company plans to emerge from bankruptcy protection, probably in January, and some competitors are worried about being undercut in pricing.

Capellas denied that that the Ashburn, Virginia-based company would engage in a price war. He did say that it was evaluating its assets in Latin America and looking at whether to be partners in operations there or to actually own assets.

He also told reporters that despite a U.S. economy storming ahead in recent months, expanding 7.2 percent in the third quarter, that he was "not anticipating any particular change in the global economy."

Information technology professionals are looking at new projects and while there is a little more interest, "at this point, we say plan for a flat economy but the indications are that we are certainly seeing signs of pick-up, particularly in the U.S."

Reuters