Date:         4/14/00
To:          Dr. David Chappell
From:      Lindsay Smith
Re:          MCI WorldCom Inc.

My Wall Street Journal Research was conducted on MCI WorldCom Inc., the No. 2 long-distance phone company.  From April 7, 2000 to May 30, 2000, there were 15 articles mentioning the company in the Wall Street Journal.
 

1.    "UK Regulator To Make BT Support Unmetered Net Access," Dow Jones Newswires, May 30, 2000.

    An interconnection dispute between British Telecommunication PLC and WorldCom caused UK telecommunications regulator OFTEL to decide that BT must provide the necessary services to enable other operators to supply unmetered Internet access over BT's local network.  BT was requested to supply WorldCom with a wholesale unmetered Internet access service from customer's home.  BT said it was only prepared to offer a metered service.  Now BT is required to offer a wholesale unmetered Internet access service to WorldCom and others under the direction issued by OFTEL.  The wholesale unmetered Internet access service is called FRIACO- Flat Rate Internet Access Call Origination.  This decision by the OFTEL will allow for competition.
 
 

2.    "WorldCom, America Online Announce Marketing Pact," The Wall Street Journal, May 24, 2000.

WorldCom Inc. agreed to market America Online Inc.'s Internet service to its residential phone customers.  WorldCom will offer users up to one hour of free phone calls a month if they join AOL.  It will also offer its own Internet-access customers an opportunity to convert to the AOL service.  Any of WorldCom's local or long-distance customers who subscribe to any of its "five cents everyday plans and joins AOL's service will receive to off of one hour of free phone calls a month as long as they remain an MCI WorldCom long-distance customer.  AOL is also offering 500 free hours of AOL in the first month of use and unlimited access for $21.95 a month after that.  A $200 in member savings at the AOL online store is also offered.  The existing agreement for dial-up access services in the U.S. between the two was extended last week.  WorldCom's UUNet has been a provider for AOL for several years.
 
 

3.    "Press Release:  WorldCom's UUNet Launches E-Services," Dow Jones Newswires, May 24, 2000.

    UUNet, a WorldCom Company, will team with IBM to offer affordable, easy-to-use e-business solutions.  Small Business Plus is their new service that will provide services a company needs to become e-business enabled like hardware, software, Internet access, hosting and 24 x 7 customer support.  Access to the latest market trends and e-business news and tips will also be offered through UUNet's online resource.  The e-functionalities offer a variety of fast, reliable Internet access speeds; dependable, high-performance e-mail; and an external Web site for marketing products and services.  UUNet's focus on the small business is an example of WorldCom's recently announced "Generation D".  WorldCom is moving the e-business marketplace from an array of fragmented elements to a cohesive suite of e-business services.  UUNet is working with IBM to provide Business Essentials and Business Essentials Plus.  These Internet solutions that combine UUNet's access services - DSL, ISDN and analog - with IBM's Small Business Web Connections.  Both solutions include: Business Essentials LAN-based Internet and email access through DSL, ISDN or analog connections; Remote Internet and email access, domain registration and Domain Name System hosting, router, email server, file server, proxy caching server and file transfer protocol server, Firewall security, local back-up of Internet server, Apache HTTP Web server, Graphical User Interface administration tool, and Administrative functionality.  In addition Business Essentials Plus includes single-user VPN remaote access via tunneling technologies, Apache HTTP Web server, software tool that allows for quick development of a public Web site, and Company Web site.  Business Essentials packages begin at $109/month for an analog line and up to $569/month for a 1.0 Mbps DSL connection.  Business Essentials Plus packages start at $159/month for analog line and up to $609/month for a 1.0 Mbps DSL connection.  UUNet is a global leader in Internet communications solutions.  WorldCom is a global leader in "all-distance" communications services with operations in more than 65 countries.
 
 

4.    Hehir, Grainne.  "MCI, Sprint To Fight For Antitrust OK At EU Meeting May 30," Dow Jones Newswires, May 23, 2000.

    On May 30, executives from MCI WorldCom and Sprint will meet with European Union regulators in an antitrust hearing on the companies' planned merger.  E.U. Commission is expected to pressure the companies to offload UUNet.  The Companies will argue against this since UUNet is WorldCom's main Internet business, and push for selling only Sprint's Internet operations.  The deal, which was announced last October, is valued at $115 billion and has already run into antitrust problems in the U.S.  To appease the E.U. who is mainly concerned with the merger's impact on the Internet connectivity market, long distance telephony and telecom services to multinational companies, Sprint will withdraw from its joint venture with Deutsche Telecom AG and French Telecom SA, but this isn't enough.  They have until June 8 to offer more remedies.  Final E.U. decision is due July 12.  The proposed merger will leave WorldCom and Sprint more than twice as big as the nearest competitor.  Bernie Ebbers, WorldCom's chairman, says UUNet will not be sold.

5.    Blumenstein, Rebecca and John R. Wilke.  "Opposition in U.S. and Europe Signals Tough Fight for WorldCom-Sprint Deal," The Wall Street Journal, May 19, 2000.

    WorldCom Inc.'s pending $115 billion purchase of Sprint Corp. is suddenly in question.  Key Justice Department advisers and European regulators are concerned that combining the companies would dominate the transport of the world's Internet backbone traffic.  The companies are scheduled to meet with Joel Klein next week in what are anticipated as being contentious negotiations.  Some observers say that the telecom deal makers who have dominated Wall Street could be headed for their first big defeat.  Customers in the U.S. spend $200 billion annually on local and long-distance calls.  Prices are falling.  Competition is fierce and acquisitions have become critical for survival.  WorldCom needs Sprint because it needs a wireless network, which Sprint owns one of the biggest.  WorldCom doesn't want to take the time to build its own wireless system.  It may turn to networks such as Voice Stream Wireless Corp. and Nextel Communications Inc. if it is prevented from buying Sprint.  Critics say the merger would amount to a barrier of entry for hundreds of smaller long-distance companies.  However, the FCC suggests that Sprint and WorldCom would hold a combined long-distance market share, based on revenue of 36.1% compared with AT&T's 43.1 %.  Seventeen percent of U.S. homes will use either carrier.  Since WorldCom already owns UUNet Technologies Inc. they are willing to divest Sprint's Internet backbone as a condition of the deal.  WorldCom and Sprint have already pledged to use the technology MMDS to bring high-speed Internet access to overlooked rural areas.

 
 

6.    Wilke, John R., and Rebecca Blumenstein.  "Justice Department Recommends Blocking WorldCom-Sprint Deal on Antitrust Issues," The Wall Street Journal, May 18, 2000.

    WorldCom Inc.'s $115 billion buyout of Sprint Corp. could be blocked because it would violate antitrust law.  Justice Department's antitrust chief Joel Klein will be meeting with both WorldCom and Sprint lawyers next week to hear their defense.  He has not yet taken a position on this six month investigated transaction.  The transaction could still be approved if the companies agree to significant divestitures to protect competition.  The deal would combine the second and third largest long-distance carriers who would then dominate Internet switching services.  The deal is also being reviewed by the Federal Communications Commission and the European Commission.  The companies may be willing to perhaps sell some portions of their long-distance business, however many executives deny any such proposal.  The companies will refuse to sell UUNet, WorldCom's Internet-backbone business.  Michael Salsbury, WorldCom's general counsel, and J. Richard Devlin, general counsel for Sprint will be present in the future meetings that will be led by Stephen Axinn.  WorldCom desperately wants Sprint for its nationwide wireless network because investors were concerned that WorldCom was missing out in a key communications market.  The deal would create a telecommunications giant under the WorldCom name with revenue of more than $50 billion.  This would make it one of the world's largest companies with operations in about 65 countries.  WorldCom would also get Sprint's fiber-optic network, its consumer and business customers and the Internet backbone.  Even if it has to sell many of Sprint's other assets to get the deal approved, WorldCom plans to save billions.

7.    "Press Release:  MCI WorldCom to Provide Svcs to eLec Commun," Dow Jones Newswires, May 4, 2000.
 

    eLEC Communications Corp. announced the signing of a Global Carrier Services Agreement with MCI WorldCom.  This agreement will provide eLEC with a domestic and international ATM network backbone.  eLEC Communications Corp is a publicly-traded local telecommunications company that seeks to take advantage of the convergence of the current and future competitive technological and regulatory developments in the Internet and telecommunications markets.  eLEC provides local, long distance, dial-up access, dedicated access, xDSL, and Web site design and hosting to small and medium-sized business customers.  Henry Azer, eLEC's CTO stated "We are pleased to be partnering with WorldCom in the development of our seamless DSL/ATM network.  This major development will significantly increase our capacity, reliability and service offerings to our customers."  With WorldCom's help, eLEC will now have the capabilities to deliver communications services over both packet-switched networks and the PSTN utilizing the Unbundled Network Elements Platform.  Paul Riss, eLEC's CEO added "in the future, we expect to migrate our larger voice customers off of UNE-P and on to a VoDSL network that we will build upon this packet-switched infrastructure."
 
 

8.    Matthews, Thomas.  "Atlantic Tele-Network:  MCI Won't Carry Audiotext," Dow Jones Newswires, May 3, 2000.

MCI WorldCom will no longer carry Audiotext traffic.  This affects Atlantic's Guyana Telephone & Telegraph Co. because MCI is the only U.S. carrier with this unit that has direct circuits.  The Audiotext traffic to Guyana has been steadily declining for the past several years and Guyana Telephone has filed applications for increases in local rates in anticipation of the end of this traffic.  Atlantic's reported income of $2.65 million was increased by about $490,000 in the first quarter by Audiotext.  The Audiotext increased Atlantic's 56 cents per share by 10 cents.  MCI carried about 50% of that traffic.  MCI's action is being reviewed by Atlantic on whether or not it is a breach of its operating agreement.  Atlantic plans to "enforce" its rights and is actively seeking other carriers for Audiotext traffic.  MCI WorldCom officials were not immediately available for comment.
 

9.    Burns, Jonathen.  "WorldCom's Ebbers '99 Bonus $7.5M, Up 5% From '98," Dow Jones Newswires, May 1, 2000.
Bernard Ebbers, president and chief executive of MCI WorldCom Inc. received a salary of $935,000 and a bonus of $7.5 million in the year 1999.  Ebbers' bonus was slightly more than the $7.2 million he received in 1998.  However, the $7.5 million was still less than half of the $17 million he was awarded in 1997.  Ebber also received 1.8 million stock options with a strike price of $46.5834 in 1999.  The shares would be worth $52.7 million with a 5% annual rate of return or $133.6 million with a 10% rate of return.  The expiration is in 2009.  MCI was trading at 46 1/8 late Monday, April 24 on the Nasdaq.  This was up 11/16 or 1.51%.  In all, Ebbers hold more than 27.3 million shares of MCI WorldCom stock.  It is worth more than $1.2 billion based on Monday's stock price.  Other bonuses were awarded to other MCI WorldCom officials.  Chairman Bert C. Roberts Jr. received a salary of $1.05 million and a bonus of $800,000.  Both the board's vice chairman, John W. Sidgmore, and the chief financial officer, Scott D. Sullivan each received a $600,000 salary, a $2.7 million bonus and 900,000 stock options.
 
 

10.    Burns, Jonathan.  "MCI WorldCom CEO:  Comfortable With '00 EPS Views of $1.89," Dow Jones Newswires, April
27, 2000.

Bernie Ebbers, MCI WorldCom's CEO, is comfortable with year-end earrings per share estimates of $1.89.  He is also pleased with the annual revenue growth projections of 13.5% to 15.5%.  WorldCom is showing signs of accelerated growth.  The company is pitching their new initiative "Generation D" that seeks to remake the company into one of the world's leading e-commerce and e-business service providers.  This will be done in both public and practice perception.  Some of the initiatives include e-commerce and e-business support services and web hosting facilities.  About 46% of WorldCom's first-quarter revenue, $10 billion, came from its international, data and Internet businesses.  WorldCom plans to investigate a bid for Britain's third-largest mobile phone company, Orange PLC.  They are also interested in any type of international partnership.  WorldCom will not be participating in the upcoming American 700 Mhz wireless spectrum auctions.  Ebber expects the European Union to file a statement of objections concerning its merger with Sprint.  He remains confident that the merger will close.  Year-end capital spending is expected to reach $8 billion due to increased spending on data and Internet capabilities.  Wall Street observers say WorldCom's stock has faced a de facto "cap" while it awaits regulatory approval for the Sprint deal.  WorldCom is off its 52-week high of 64 33/64.
 
 

11.    "Press Release:  MCI WorldCom Invests In Submarine Cable," Dow Jones Newswires, April 19, 2000.

MCI WorldCom announced today that it will be building the first self-healing broadband fiber optic submarine cable in the Asia Pacific region.  It is know as the Asia Pacific Cable Network-2 (APCN-2) and is expected to be completed by September 30, 2001.  MCI is the third largest investor in this project among world leaders in the telecommunications industry.  The total cost of APCN-2 is US$800 million.  The agreement was signed in Singapore this week.  The 19,000 km cable system will connect Japan, Korea, China and Hong Kong, Taiwan, Philippines, Malaysia and Singapore.  It will also provide seamless interconnection with other major oceanic cable networks for USA, Europe, Australia and other parts of Asia.  According to Bill Barney, president of Asia Pacific "locally, regionally and globally MCI WorldCom is bringing Asia Pacific to the digital generation."  On April 19, 2000 APCN-2 and NEC Corporation of Japan are to sign the supply contract for the construction of the APCN-2 cable system.  The system is designed to provide 2.56 Tbs and Dense Wavelength Division Multiplexing technology.  This will provide upgradeable, future-proof transmission facilities that support Internet and e-commerce.  It is meeting the present and future growth in telecommunications traffic.  MCI WorldCom has operations in more than 65 countries with revenues in 1999 as $37 billion.  More than $15 billion was from high-growth data, Internet and iternational services.
 
 
 
 

12.    "MCI WorldCom Inc.," The Wall Street Journal, April 18, 2000.

President and Chief Executive Officer Bernard J. Ebbers of MCI WorldCom has made some acquisitions that have reshaped the worlds of online services and network services.  WorldCom acquired CompuServe for $1.2 billion in September of 1997.  They traded its subscribers to AOL in exchange for AOL's high-speed networking division, ANS Communications.  In the fall of 1999, MCI WorldCom open its stock vault to a $115 billion takeover of Sprint which will result as the biggest telecommunications company in the world with 30% of the consumer long-distance market, more than 30 million long-distance customers, a global reach, and the ability to offer "all distance," voice, wireless and high-speed Internet access.  Mr. Ebbers formed WorldCom in 1983 in Hattiesburg, Miss. in a coffee shop with just a handful of investors calling it Long Distance Discount Service.  He built it into a $5 billion-a-year company by purchasing smaller telecommunications rivals.  Those include Metromedia Communications, WilTel Network Services, IDB Communications Group, and Advanced Telecommunications.  By merging with MFS Communications in August of 1996, WorldCom became the first company since AT&T to offer both local and long-distance telephone services.  This same merger also gave them possession of UUNet Technologies, one of the biggest Internet-service providers.  It was not until the fall of 1997 when Ebbers was able to acquire MCI for $37 billion in stock after MCI's $21 billion merger with British Telecommunications was fraying.  MCI WorldCom bought CAI Wireless in the spring of 1999 and then also SkyTel.  By taking Sprint, MCI WorldCom brought together the second and third-largest long-distance carriers in the U.S. and got a nationwide wireless network.

13.    Blumenstein, Rebecca. "MCI Plans to Pursue Acquisitions To Expand Internet Applications", Wall Street Journal, April 14, 2000.

MCI WorldCom Inc. is planning to buy companies that will expand its Internet applications.  They launched a formal plan to shift its business from transporting voice and data traffic to Web-related services for businesses.  Bernard J. Ebbers, MCI WorldCom's chief executive officer, said in an interview that recent stock-market declines among Internet companies are good because it shows that companies that add value like MCI are able to succeed.  Examples of services that are beyond Web-hosting include cheaper voice-over-the-Internet calls, custom Web-site design, and a new routing system for e-mails for a business.  One company that MCI plans to merge with is Sprint.  The company will drop the "MCI" after merging and will be WorldCom.  They already own UUNet, one of the largest Internet support companies.  To finance the new investment MCI plans to reallocate is capital spending of $8-9 billion.  One-hundred and twenty Web-hosting centers should be up
and running by the year's end.
 
 
 

14.    Favate, Sam.  "PTEK Gets 'Favorable' Settlement In MCI WorldCom Suit," Dow Jones Newswires, April 12, 2000.
Premiere Technologies (PTEK Holdings Inc.), a telecommunications company, decided to dismiss the lawsuit against MCI that was filed in June of 1999 in Atlanta's Fulton County District Court due to a favorable settlement with MCI WorldCom.  PTEK also terminated the original strategic alliance agreement between the two.  The lawsuit alleged that MCI breached the strategic alliance agreement between the companies.  As reported, MCI did this by allegedly awarding various contracts to other vendors.  PTEK entered agreements, however financial terms were not disclosed.  According to the new agreements MCI will now provide PTEK with a broad array of products and services including Internet-related services.  There was not a spokesperson available for MCI WorldCom for comment.
 
 
 

15.    "MCI WorldCom Unit Extends Pact to Carry AOL Dial-Up Service," The Wall Street Journal, April 7, 2000.

MCI WorldCom's UUNet Internet unit extended a contract to provide America Online Inc. with dial-up Internet access.  The new pact covers the next five years.  Financial terms were not disclosed yet although the new commitment is a victory for MCI WorldCom.  Questions about the AOL contract have existed since AOL has signed a deal to buy Time Warner Inc.  UUNet carries much of AOL's traffic.   According to MCI WorldCom's vice chairman and UUNet's chairman, John Sidgmore, MCI WorldCom estimates to receive $1 billion in annual revenue from AOL.  The new contract calls for lower prices and some analysts believe this could be a problem for UUNet's revenue.  MCI's stock went down $1.3125 to $42.50 in Nasdaq Stock Market trading Thursday.  With falling prices some of UUNet's costs have also fallen.  Again according to Mr. Sidgmore "MCI WorldCom expects to provide high-speed access to AOL as more of its customers upgrade from dial-up access."