WorldCom Inc. says it expects its $46 billion purchase of MCI Communications Corp. to be finally cleared as soon as this summer after the European Union’s approval Wednesday of its plan to create the No. 2 U.S. phone company.
While U.S. regulators have said they don’t expect to rule on the purchase until September, they did collaborate with the European Commission, the EU’s executive agency, on the evaluation. To satisfy EU conditions, MCI agreed last month to sell its entire Internet business, which analysts said could fetch more than $1 billion. The companies must complete the sale within a certain time period and not try to win back MCI Internet customers.
The combined company, to be called MCI WorldCom, will have 1998 revenue of about $32 billion and will be the strongest competitor to the No. 1 U.S. long-distance company, AT&T Corp., as well as a formidable global competitor. MCI is the second-biggest U.S. long-distance company and WorldCom is No. 4.
“WorldCom is now arguably in the leadership position of the global telecom environment,” said David Gillick, an analyst at A.T. Kearney, a telecommunications consultancy that is owned by Electronic Data Systems. “All the telecom incumbents have yet to really make it happen.”
The commission’s green light ends a seven-month review centered on concerns that WorldCom would dominate global Internet traffic.
In a bid to stem regulatory opposition, MCI agreed in May to sell its wholesale Internet business to Cable & Wireless PLC for $625 million. When that failed to satisfy regulators, MCI offered to sell its entire Internet business.
