Newspaper article THE JOURNAL RECORD

MCI Rivals Prepare to Do Battle with Merging Competitor

Newspaper article THE JOURNAL RECORD

MCI Rivals Prepare to Do Battle with Merging Competitor

Article excerpt

NEW YORK -- Bell Atlantic's chairman and chief executive, Ray Smith, was working in his Washington office when a corporate staffer from down the hall confirmed the electrifying news.

MCI was in takeover talks with British Telecom, according to the wire report handed to Smith Friday afternoon. Yet Smith seemed unflustered -- even though the deal would create a phone foe rivaling Bell Atlantic's proposed $23 billion marriage with Nynex, another regional phone company.

Smith said Bell Atlantic's "reaction should be, `We hope it teaches (MCI) better manners,'" recalled the staffer, Eric Rabe. "They've been pretty rough and tough lately and the Brits are known for their genteel" ways. To be sure, MCI and other long-distance phone companies already are feverishly going beyond their core businesses, spending billions to build local and mobile phone networks and push such services to consumers and businesses. Many are merging and partnering with other companies. To what extent MCI will intensify its efforts with the help of a deep-pocketed, if more staid, British parent was the subject of enormous speculation by corporate chiefs around America on Monday. But MCI rivals -- particularly AT&T Corp., the No. 1 long-distance carrier with the most to lose from an MCI marriage -- aren't waiting to find out. Intensifying the rivalry are new U.S. reform rules that make it easier for long-distance carriers, regional phone companies and cable TV companies to compete on each other's turf. One of the main battlegrounds with a newly energized MCI-British Telecom will be in overseas markets for multinational corporations, which demand all-in-one packaged services that combine traditional local, long distance and other communications services in one contract. Thus far, though, many of AT&T's overseas alliances have been with smaller companies that can't deliver the powerful resources of huge European entities such as British Telecom, said Joseph Kraemer, head of the communications and electronics practice at A.T. Kearney, a management consulting firm. "I would suggest they should look at their global partnership and say, `Why can't they cut deals with other large companies,'" Kearney said. …

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