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Verizon Completes $8.5 Billion Merger with MCI
[January 06, 2006]

Verizon Completes $8.5 Billion Merger with MCI


By ROBERT LIU
TMCnet Wireless and Technology Columnist
 
Verizon Communications and MCI on Friday announced they have finally closed the $8.5 billion merger, as expected, creating a regional Bell operating company with a national footprint and approximately 250,000 employees serving customers in 150 countries.


 
As part of the integration of MCI, Verizon said it has created a business unit encompassing business and government customers and related functions of the former MCI. Michael Capellas, former president and CEO of MCI, also announced that he is leaving the business now that the merger has been completed.

 
“This milestone for Verizon creates a new competitive force with the power of the global MCI network and the reach of Verizon's broadband and wireless networks in the U.S.,” said Verizon Chairman and CEO Ivan Seidenberg. “The combination of our world-class wireless and broadband access networks with the leading global IP (Internet protocol) backbone will allow us to deliver the highest quality end-to-end experience for our customers.”
 
Completion comes nearly a year after Verizon first disclosed its interest in MCI. Since then, it has had to fend off Qwest Communications in a bidding war for the assets of MCI. Once Qwest finally backed off, competitors such as telecom carrier services company XO Communications and others tried to force Verizon into key concessions in order for them to complete the deal.
 
The deal had a relatively smooth sailing through shareholders and European regulators. But U.S. regulators approached the deal with considerably more scrutiny, forcing Verizon into a Justice Department consent decree that stipulated it must lease dark (unused) fiber connections to 356 buildings in several states in its East Coast footprint. A few days later, the FCC mandated that Verizon and SBC (which was in the midst of its own takeover of AT&T) open up their networks to offer so-called “naked DSL.”
 
As a result of the merger, Verizon will now operate three network-based businesses: the newly created Verizon Business; Verizon Wireless, and Verizon's landline segment, which is deploying wireline broadband and video networks. Verizon Business will also include part of Domestic Telecom, including the former Verizon Enterprise Solutions Group. Verizon Business will target medium and large businesses and government customers. New products and services are expected later this month.
 
As previously announced, John Killian has been named president of this new unit.
 
Other segments of the former MCI are being combined with similar existing functions in Verizon.
 
Effective today, trading has ceased in MCI's common stock.
 
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Robert Liu is Executive Editor at TMCnet. Previously, he was Executive Editor at Jupitermedia and has also written for CNN, A&E, Dow Jones and Bloomberg. For more articles, please visit Robert Liu's columnist page.

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