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Taking on MCI and AT&T
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December 16, 1996: 4:40 p.m. ET
WorldCom, soon to buy UUNet and MFS, takes aim at the big boys
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NEW YORK (CNNfn) -- For John Sidgmore, the competition is only two of the biggest telecommunications companies in the world, AT&T Corp. and MCI Corp.
And it doesn't faze him one bit.
To the former chief executive of UUNet Technologies -- and current president of MFS Communications, the phone company that bought UUNet -- duking it out with the telecommunications giants for the business of American corporations is the only way to go.
Sidgmore believes that playing David to the industry's Goliath's is inevitable once MFS shareholders accept the $14 billion bid from WorldCom Inc., the nation's fourth largest long distance carrier.
The MFS shareholders meeting is scheduled for December 20, and the deal is expected to be approved.
The resulting company, with $5.4 billion in revenues, will be positioned to offer business customers long-distance, local and Internet service from one source, a unique combinations says Sidgmore. (157K WAV) or (157K AIFF)
UUNet is one of the nation's premier Internet service providers; MFS provides local business phone service; WorldCom is a long-distance carrier.
With the three under one umbrella, Sidgmore believes that they can successfully pursue their business plan, which is to help companies replace telecom systems and corporate data bases that are years out of date.
"We have religiously focused on the needs of business over the last few years," Sidgmore said, speaking on CNNfn's "Digital Jam."
"We still believe the biggest area of opportunity for UUNet and MFS is the big boring corporate application that already exists on an in-house network or some other public network," Sidgmore added.
Bringing such legacy systems up to snuff is also profitable, once a telecom company has access to local phone networks, which it now does through MFS.
"When you resell local service your margins are pretty well defined by local tariff to about 20 percent," said Sidgmore. "When you own your own facilities your margins are in the 60 percent range."
So the new WorldCom ventures forth to slay the giants. "We've always seen our main competitor in the U.S. being MCI," he said, though that company does not have access to local callers yet.
"We see people in the online world as customers, but long-run, AT&T and MCI will be the big competitors."
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