The Verizon-MCI Merger
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Please note:
This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Case Details: |
Price: |
| Case Code |
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BSTR259 |
For delivery in electronic format: Rs. 300;
For delivery through courier (within India): Rs. 300 + Shipping & Handling Charges extra
ThemesMergers |
Acquisitions |
Strategic Alliances
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| Case Length |
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19 Pages |
| Period |
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2000-07 |
| Pub Date |
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2007 |
| Teaching Note |
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Not Available |
| Organization |
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Verizon,
MCI |
| Industry |
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Telecom and Broadband |
| Countries
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US |
Abstract:
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The case discusses the merger of one of the largest telecom companies in the US,
Verizon with MCI (formerly known as WorldCom). Verizon acquired MCI, mainly
because of the synergies in operations and their complementary businesses. The
decision for merger was also influenced by the prevailing scenario in the US
telecom industry, which was witnessing consolidation. Verizon was finally able
to acquire MCI in January 2006, though the merger process started in February
2005. At the same time, the merger of AT&T with SBC was also announced. Several
consumer groups expressed their concern about these mergers as they were of the
view that these mergers were a sign of duopoly in the US telecom market.
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Verizon created a unit called Verizon
Business, combining enterprise and government customers of MCI
and similar operations of Verizon. Other businesses of MCI were
integrated with corresponding businesses of Verizon. Though
there were doubts raised by industry experts about the success
of post-merger integration of both the companies, it went
through without any major hiccups. Analysts were of the opinion
that credit must go to Verizon for being well prepared for the
merger and making it as 'merger of equals.' In the financial
year 2006, operations of Verizon Business were spread over 150
countries and it generated revenues of US$ 20.5 billion.
Issues:
» Study the synergies of merger between Verizon and MCI
» Understand the reasons for the initial success of the merger
» Compare the two mergers of Verizon with MCI and that of AT&T with SBC
» Study the legal and regulatory conditions governing the mergers and
acquisitions in the US telecom industry
» Analyze the trends in the telecom industry in the US
Contents:
Keywords:
Verizon Communications, MCI Inc, US Telecom Industry,
Industry Consolidation, Duopoly, Mergers and Acquisitions, WorldCom, Corporate
Bankruptcy, Merger Integration, Merger Synergies, Complementary Businesses,
Convergence, Federal Communications Commission, Antitrust Suit, American
Antitrust Institute, Legal and Regulatory Environment, Qwest Communications
International
The Verizon-MCI Merger
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