CABLE & Wireless (C&W), the UK's second-biggest telecoms company, has snapped up the booming Internet backbone business of America's MCI
Communications in a #385m deal.
The acquisition in the world's fastest-growing Internet market helps reduce C&W's dependence on the volatility of Asia and forms part of MCI's efforts to assuage regulatory concerns about its $37bn (#22.5bn) merger with US peer WorldCom.
The sale comes three days after European antitrust chief Karel Van Miert warned that any overlap between MCI and Worldcom in the Internet backbone business - the main trunk of the Internet in and out of Europe - should be eliminated.
The European Commission said the disposal might help ease regulatory concerns that the second-biggest telecoms merger on record might create a dominant position in Internet backbone services.
C&W plans to integrate the business into its small US long- distance operation.
The US is home to 70% of the world's Internet market and C&W's purchase is growing at around 50% per year, has assets of around $100m, and a projected annualised turnover of $220m in 1998.
Although analysts welcomed the deal which boosts the value of C&W's American assets, the shares lost early gains and closed down 4p at 675p.
With around 60% of group profits coming from a majority stake in Hong Kong Telecommunications, C&W's stock is at the whim of Asia's financial troubles.
In an attempt to create value outside Hong Kong, where once fat profits are being squeezed by competition and the region's economic uncertainty, C&W chief executive Richard Brown has streamlined the group's global empire.
C&W is the world's third-largest carrier of international
traffic with annual revenues of around $12bn.
Key assets outside Hong Kong and the US include a majority-owned stake in the UK's biggest cable group, Cable & Wireless Communications and a 50% stake in One-2-One, the group's joint cellphone venture with US West.
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