Verizon-MCI Partnership Best for Customers

...the Internet and National Security, Tauke Says...

i-Newswire, 2005-03-05 - NEW YORK – A senior Verizon executive says the agreement to join Verizon and MCI creates the "best possible partnership." But, he said, a combination of Qwest and MCI could result in less investment in MCI’s networks and Internet backbone, and harm national security-related customers and the long-term interests of large businesses, government agencies, consumers and shareholders.

Executive Vice President Tom Tauke told a meeting of telecommunications leaders in Florida today that Verizon believes the Qwest attempt to acquire MCI is "not in the public interest."

MCI operates a data network that is one of the principal such networks serving large customers around the globe, including the U.S. Defense and Homeland Security departments.

Tauke noted that Verizon has estimated it will invest approximately $3 billion, primarily in MCI’s Internet backbone, network and systems, while Qwest is unlikely to make such an investment because of its weak financial condition. Instead, Tauke said, cash-strapped Qwest could decide to channel Internet traffic onto its own network and potentially remove a backbone competitor.

"We announced our plans to invest substantially in MCI's network and systems to continually upgrade those assets," Tauke said. "Qwest has made no such commitments. They may even close MCI's Internet backbone and long-distance network, something that would result in less competition, more concentration and fewer choices.

"We don’t believe any of this can be good for consumers or MCI's government or national security-related customers," he said. "In our view, a Qwest-MCI combination is not in the public interest or the interest of ordinary shareholders and bondholders concerned about creating value over the long-term."

The Verizon-MCI agreement was announced on February 14 in New York.

Tauke dismissed claims by Qwest that its potential combination with MCI could gain necessary government approvals in a shorter time frame. "Qwest will need approvals from essentially the same number of regulators," he said. Verizon expects all regulatory approvals of its MCI transaction to be complete in approximately one year.

Verizon began the process of obtaining regulatory approvals for its $6.7 billion MCI transaction on Friday, when it filed an application with the New York Public Service Commission.

“We view this transaction as a natural next step for Verizon and the industry, and we are confident that Verizon is the best possible partner for MCI and the customers and shareholders of both companies,” Tauke told attendees of the annual Emerging Issues Policy Forum. “In our view, this transaction is best for customers because it will result in additional investment in MCI’s network and Internet backbone and produce a strong and well-financed competitor to go head-to-head with other companies.”

Enterprise customers will benefit when Verizon can better compete for and serve large business and government contracts with a complete range of offerings, including wireless and the most sophisticated IP- ( Internet protocol ) based services, he said.

Verizon Communications Inc. With more than $71 billion in annual revenues, Verizon Communications Inc. ( NYSE:VZ ) is one of the world’s leading providers of communications services. Verizon has a diverse work force of more than 210,000 in four business units: Domestic Telecom serves customers based in 29 states with wireline telecommunications services, including broadband, nationwide long-distance and other services. Verizon Wireless owns and operates the nation’s most reliable wireless network, serving 43.8 million voice and data customers across the United States. Information Services operates directory publishing businesses and provides electronic commerce services. International includes wireline and wireless operations and investments, primarily in the Americas and Europe. For more information, visit www.verizon.com.

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