Analysis of MCI, Verizon, and Qwest's Business Strategies

This report provides a comparative analysis of MCI, Verizon, and Qwest, examining their strengths, weaknesses, and strategic decisions regarding mergers and acquisitions. The analysis includes an evaluation of their financial performance, market positions, and the implications of their merger offers. The report discusses the synergies of proposed combinations, the value to shareholders, and recommendations regarding which offers MCI should accept. Furthermore, it explores the benefits of mergers for both MCI and the acquiring companies, and provides a conclusion based on the analysis. This report offers insights into the telecommunications industry and the strategic considerations involved in mergers and acquisitions, supported by references to relevant literature.

MCI
Strengths
• Broad infrastructure and well
established customer base
• Has a strong international presence
• Has net operating losses that is
valuable for tax purposes.
• Is the largest global network drive
• Has a diverse and well established
customer base
• Have low debt
• Have a robust IT protocol
Weaknesses
• Are struggling with price
compression driven by competition
and technological displacement
• Face heavy competition’
• Use of aging technology
• The WorldCom bankruptcy legacy

VERIZON
Strengths
• Have positive earnings
• Good interest coverage ratio
• Have strong revenue
• Use future tech
• Have an A+ rating
Weaknesses
• Weak sales due to downturn
• Are not strong internationally
• Very large thus difficult to integrate
and manage
• Still recovering from 911
• Lack of international presence

QWEST
• Strengths
• Has net operating losses that are
valuable for tax purposes
• Good investment
• Aging tech
• Altered plans after fraud charges to
regain reputation
• Begin work with Fiber optics which is
the future of tech
• Weaknesses
• Faces strong competition
• Do not have a large international
presence
• Do not have a good revenue

Synergies in the proposed combinations
The following are the synergies in the proposed combinations:
•Increased market
•Reduced cost thus maximizing profits
•Use of future tech
•Strong competitors
•Enhanced performance
•Increased international presence
•Acquire new talent and technology

The offers
Qwest offered $8billion dollars that they increased to $8.4 billion
Verizon offered $6.75 billion that they increased to $7.6 billion
The following explains the two structures:
The Qwest offer provides not only short term financial goals but also long term as well
The Verizon offer is more practical and the company has a good previous track record.

The value to MCI shareholders:
•Qwest bid: $26 Per MCI common share
•Verizon bid: $23.50 per MCI common share
Should the Boards of MCI and US-West have accepted the offers
•No .MCI should not have accepted the offer to merge with WorldCom
•Yes. Us-west should have accepted to merge with Qwest

Obligation to shareholders
The obligation to shareholders is to ensure that whatever MCI decides to merge with it
will create value for the shareholders
Was the obligation fulfilled?
Yes it was fulfilled

WorldCom and Qwest
Both WorldCom and Qwest benefited when they merged with MCI and US West in the
Following ways
• increased international presence
•Improved performance
•Better competitors
•Increased revenue
•Positive earnings
Therefore it is correct to say that their shareholders did benefit in terms of the monetary
Value.

MCI should accept which offer
MCI should accept Verizon’s offer because they have a good previous track record and their
offer is more practical.

References
•Bishop, J., 2005. Building international empires of sound: concentrations of power and
property in the “global” music market. Popular Music and Society, 28(4), pp.443-471.
•Warf, B., 2003. Mergers and acquisitions in the telecommunications industry.
Growth and Change, 34(3), pp.321-344.
•Tang, R.Y. and Metwalli, A.M., 2006. Mergers and Acquisitions in Asia: A Global Perspective.
Routledge.
•Veltman, K.H., American Visions of the Internet: A Crisis of Trust.