MCI Holds Fire on Talk of [Pounds Sterling]3.4bn Offer from Qwest

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MCI Corp, whose former boss Bernie Ebbers is on trial for alleged conspiracy and fraud, is reportedly in talks over a $6.3 billion ([pounds sterling]3.4 billion) takeover by Qwest Communications amid telecoms sector merger mania.

The global industry saw $44.3 billion in mergers in January while in the US carriers are struggling to stay competitive in a market beset by price wars.

But some observers suggest MCI, formerly WorldCom, may be on a fishing trip for another partner such as Verizon.

Although the company would not confirm talks have taken place, it is no secret it has been looking for such a deal ever since emerging from bankruptcy after the disastrous Ebbers era.

That gained new urgency last week when long-distance rival AT&T agreed to a $16 billion takeover by SBC Communications.

Qwest, the dominant local phone service provider in the north-west of the US, is recovering from financial scandals and lost $1.66 billion in the first nine months of 2004, including a $250 million fine to settle fraud charges.

Analysts, while agreeing both companies need a fix, say a marriage-between the two is not the most logical pairing, with each bringing its own weaknesses. …