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MCI calling Nextel?
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April 6, 1999: 6:27 a.m. ET
MCI looks to plug wireless gap but price and ownership issues may block deal
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LONDON (CNNfn) - MCI Worldcom, hoping to end its absence from the U.S. cellular market, is reportedly talking to Nextel Communications about a possible takeover.
Nextel, the last independent U.S. wireless operator, doubled its subscriber base to almost three million last year. Insiders put the chances of a reaching a deal with MCI at only 50 percent, the Wall Street Journal reported Tuesday.
Nextel's (NXTL) stock price has doubled since the start of the year and climbed sharply in recent weeks on speculation of a deal with MCI or other suitors.
MCI (WCOM) has seen rivals such as AT&T (T) sign up thousands of new cellular customers. It flirted with a bid for AirTouch (ATI) to build its own wireless presence before Vodafone (VOD) of the U.K. swooped down on the California firm.
Virginia-based Nextel has a market value of around $11 billion and is viewed as a good strategic fit for MCI through its focus on the business market, said the Journal.
MCI has eschewed the wireless business in the face of its own strong long-distance business, but has said it may enter the cellular market if long-distance traffic continues to shift to cellular phones. Sprint's (FON) PCS unit is also seen as a possible fit for MCI.
The downside for MCI is Nextel's $7.7 billion debt burden which dragged the company to a 1998 net loss of $1.8 billion on the same level of revenues.
MCI has been loath to make a big acquisition which would drag down its earnings.
Nextel shares rose 1-1/16 to close Monday at 39-5/8 while MCI stock climbed 3-1/4 to 92-1/2. 
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MCI WorldCom
Nextel
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