WSJ.com - Qwest Is in Talks to Buy MCI, Further Roiling Telecom World: "MCI Inc. and Qwest Communications International Inc. are in talks that could lead to a merger as pressure on telecom companies to consolidate increases in the wake of SBC Communications Inc.'s agreement to purchase AT&T Corp. earlier this week.
Qwest, which has been in on-and-off talks with MCI for months, is offering about $6.3 billion to acquire MCI, close to its market value. The discussions have heated up in recent days, and the two companies have reached the point of discussing hard details like price and structure. Yet the talks remain highly fluid, people close to the situation say, and could break down.
What could easily derail Qwest's designs would be a bid by Verizon Communications Inc., which is also having exploratory talks with MCI. Verizon hasn't yet made up its mind whether it wants to bid. Several noncorporate buyers have also approached MCI in recent months.
Having shed most of its debt in bankruptcy court, MCI's most attractive asset may be its balance sheet, which now has just $6 billion in debt and $5.6 billion in cash.
WorldCom acquired MCI for $37 billion in 1998, and the combined company had a market capitalization of more than $180 billion at its peak in 1999.
Subsuming the long-distance companies are the nation's local phone giants like SBC – and perhaps Qwest and Verizon – as they try to protect themselves against the onslaught of cable rivals, which are making rapid moves into the phone business. While the decline of the Bells' local phone business hasn't been as fast as that of the long-distance business, it has been shrinking for more than three years, with consumers using wireless phones and even Internet calling to substitute for traditional land-line phones.
Even in the telecom world, which has grown accustomed to lots of deals, the pace of the consolidation has left virtually all major players scrambling to reassess their options."