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Last Updated: Thursday, 3 February, 2005, 18:00 GMT
MCI shares climb on takeover bid
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Competition in the US telecoms industry has intensified
Shares in US phone company MCI have risen on speculation that it is in takeover talks.

The Wall Street Journal reported on Thursday that Qwest has bid $6.3bn (3.4bn) for MCI.

Other firms have also expressed an interest in MCI, the second-largest US long-distance phone firm, and may now table rival bids, analysts said.

Shares in MCI, which changed its name from Worldcom when it emerged from bankruptcy, were up 2.4% at $20.15.

Press reports suggest that Qwest and MCI may reach an agreement as early as next week, although rival bids may muddy the waters.

The largest US telephone company Verizon has previously held preliminary merger discussions with MCI, Reuters quoted sources as saying.

Merger pick-up

Consolidation in the US telecommunications industry has picked up in the past few months as companies look to cut costs and boost client bases.

A merger between MCI and Qwest would be the fifth billion-dollar telecoms deal since October.

Last week, SBC Communications agreed to buy its former parent and phone trailblazer AT&T for about $16bn.

Competition has intensified and fixed-line phone providers such as MCI and AT&T have seen themselves overtaken by rivals.

Buying MCI would give Qwest, a local phone service provider, access to MCI's global network and business-based subscribers. MCI also offers internet services.

Difficult past

MCI was renamed after it emerged from Chapter 11 bankruptcy protection in April last year.

It hit the headlines as Worldcom in 2002 after admitting it illegally booked expenses and inflated profits.

The scandal was a key factor in a global slide in share prices and the reverberations are still being felt today.

Shareholders lost about $180bn when the company collapsed, while 20,000 workers lost their jobs.

Former Worldcom boss Bernie Ebbers is currently on trial, accused of overseeing an $11bn fraud.


SEE ALSO:
SBC agrees to buy AT&T for $16bn
31 Jan 05 |  Business
US mobile groups confirm merger
15 Dec 04 |  Business
MCI slips to $71m quarterly loss
05 Aug 04 |  Business
Potential US buyer eyes MCI stake
12 Jul 04 |  Business
MCI out of Chapter 11 bankruptcy
20 Apr 04 |  Business
Trouble looms for MCI sell-off
16 Mar 04 |  Business


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