Price war hurts telecoms firm MCI

MCI is cutting thousands of jobs

US telecoms company MCI has seen its third quarter loss balloon to $3.4bn (£1.8bn) after a price war forced it to reduce the value of its assets.

The figure compares to the $55m the firm lost for the same period last year when it was formerly known as WorldCom and fighting bankruptcy.

Yet MCI's share price rose more than 2.5% after its market update, which said that price pressures were easing.

Excluding a $3.5bn write-down, MCI had an operating income of $121m.

This is up from $77m a year earlier.

Tough marketplace

Since its emergence from bankruptcy in April, MCI has suffered from declining prices for its core long-distance calls services to large businesses.

Although demand has remained strong, the sheer number of competitors has brought prices down to rock bottom.

MCI's third quarter revenues were down 15% year-on-year to $5.08bn.

"Pricing is starting to stabilise, quite frankly because there were such severe write-downs last year," said MCI chief executive Michael Capellas.

MCI also said that cost cuts had improved its profitability.

Worldcom was the world's largest bankruptcy.