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. Last Updated: 07/27/2016

Merged MFS, WorldCom Firm Set to Target Corporate Sector

LONDON -- Newly merged MFS-WorldCom Inc. seems placed to earn high profits from the most lucrative section of Europe's telecommunications market, the corporate sector, experts said Tuesday.


The $14.4 billion merger of MFS Communication Co Inc. and WorldCom Inc., announced Monday, owes its conception to recent U.S. deregulation legislation.


"This merger is really driven by the need to strengthen themselves in their newly opened-up home market," said John Matthews, for high-technology research consultancy Ovum.


The merged company will have sales of about $5.4 billion a year, to more than 500,000 business customers throughout North America, Europe and Asia.


But the merger will have repercussions in Europe, where some national telephone monopolies, due to expire in 1998, present a tempting combination of bloated prices and workforces and complacent management.


MFS-WorldCom is seen as a powerful competitor which could even take business away from some of the big, global groupings. These comprise Global One -- with Deutsche Telekom AG, France Telecom and Sprint Corp of the U.S. -- British Telecommunications Plc and MCI Communications Corp's Concert, and the Unisource partnership led by AT&T.


Experts say MFS, with its burgeoning networks of fiber optic cables in major financial centers, allied with WorldCom's long-distance services will have powerful leverage at the top end of the market.


David Roffey, who leads PA Consulting's telecommunication strategy team, said the fit between MFS and WorldCom makes sense. MFS has local networks, particularly in the United States, and WorldCom has expertise in long-distance line leasing.


In Europe the new combination will be taking aim at the currently protected and over-priced national markets which become liberalized in 1998.