MCI's emergence will be a catalyst for industry consolidation, according to Probe Financial Associates

24 November 2003 Cedar Knolls, NJ Lightwave--As MCI exits bankruptcy, implications for the telecom industry begin to surface. Existing carriers are forced to consider cross-sector mergers to remain competitive. Long distance carriers are losing customers to the incumbent local-exchange carriers (ILECs) and ILECs are losing customers to mobile carriers.

Nov 24th, 2003

24 November 2003 Cedar Knolls, NJ Lightwave--As MCI exits bankruptcy, implications for the telecom industry begin to surface. Existing carriers are forced to consider cross-sector mergers to remain competitive. Long distance carriers are losing customers to the incumbent local-exchange carriers (ILECs) and ILECs are losing customers to mobile carriers.

"Rumors are increasing that an RBOC [regional Bell operating company] will try to acquire a long distance company," comments Allan Tumolillo, chief operating officer of Probe Financial Associates. "As consumers move to buying service in bundles, companies that offer all levels of service, local, long distance and mobile, have the best chance of surviving."

MCI has strong assets in metropolitan markets and a strong presence on the internet. "We assume that MCI's leadership will want to do more than simply emerge from bankruptcy and be acquired," concludes Tumolillo. The market may decide otherwise. MCI, with little debt and a low valuation, could be an attractive takeover target.

Probe Financial Associate's new report, "Consolidation in the Air? MCI is a Wildcard" analyzes the emergence of MCI from bankruptcy and the effect it will have on the rest of the telecom industry.

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