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February 16, 2005

Verizon Communications Acquires MCI

Verizon Communications (verizon.com) announced on Monday that it has acquired MCI (mci.com) for $4.8 billion in equity and $488 million in cash, confirming reports that emerged late last Friday.

MCI will also pay a special dividend, Verizon said, bringing the value of the deal to $6.7 billion. Verizon will assume MCI's debt, estimated at $4 billion.

Verizon said the acquisition enhances its ability to serve large business and government customers with a complete range of services, and ensures that MCI's Internet backbone network will have the financial strength to be maintained and improved.

The acquisition comes just a few weeks after SBC acquired AT&T. Like AT&T, MCI is an attractive asset because of its extensive national infrastructure and strong corporate customer base.

MCI also has strong Web hosting capabilities, bolstered by a strong enterprise hosting base built through its acquisition of Digex. According to research and analysis firm Netcraft (netcraft.com), MCI is the world's ninth largest host, home to 878,000 hostnames. MCI's customer base, Netcraft says, has been growing at a rapid pace, adding 233,000 hostnames in the last year, with 61,000 coming in the last two months alone. MCI's high-profile hosting clients include The Weather Channel and Bloomberg.

Verizon has an extremely small Web hosting presence with just 10,000 hostnames, according to Netcraft.

The Verizon and MCI boards have approved the agreement and both companies expect to attain regulatory approval within the year.

Just last year MCI emerged from the largest bankruptcy in corporate history amid a massive accounting scandal. Former CEO Bernie Ebbers is currently facing fraud charges.

06:25 AM in News | Permalink